dornifll ICam ^rljool IGibtatg (SI PI \\o\ Vfee Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924018845333 A TREATISE {'^4 ^ - ' ON THE LAW RELATING TO ^"^ ■^* ^/ BANKS AND BANKING; WITH AN APPENDIX coNTAiinira THE NATIONAL BANKING ACT OF JUNE 3, 1864, AND AMENDMENTS THERETO. BY JOHN T. MOKSE, JR. OF THE SUFFOLK BAB. SECOND EDITION, REVISED. >^^-^ ^^>^ BOSTON: LITTLE, BROWN, AND COMPANY. 1879. ^^^ J- >^-/^^7^ ^ ^^:^^)^ Entered according to Act of Congress, in the year 1870, \sj John T. Morse, Je., In the Clerk's Office of the District Court of the District of Massachusetts. Entered according to Act of Congress, in the year 1879, by John T. Morse, Jr., In the Office of the Librarian of Congress, at Washington. CAMBRIDGE \ PRESS OP JOHN WILSON AND , OCT 27 1937 PREFACE TO SECOND EDITION. The first edition of this book certainly enjoyed a better recep- tion than it deserved. When a second edition was called for, I resolved, so far as possible, to correct in it the faults of its predecessor. To this end I have labored very hard, seeking not only to add to the volume, as at first published, all the new- material derived from later judicial decisions, but undertaking also to correct original defects of plan and construction. This proved to be an enterprise of such magnitude that I can truly say that the toil expended upon this edition has very greatly exceeded that which was devoted to the composition of the book in the first instance. It was a re-writing rather than an editing. An especial effort has been made to condense the text, and a great deal of matter, in the nature rather of discus- sions than of the statement of established principles, has been omitted. The increase in the number of authorities cited is considerable, being about thirty per cent ; or a trifle over four hundred new cases, while the pages of text have been increased by one hundred and five, or about twenty per cent. This indicates in some degree the measure of compression brought to bear in this edition. It must be acknowledged that a still greater amount would have improved the book even more in the opinion of the professional man. But it purports to be a treatise, not a mere collection of authorities ; and it has also been extensively used among business men engaged in banking, who require a somewhat fuller elucidation of rules and princi- ples than would suffice for the lawyer. For these reasons I have felt justified in employing greater elaboration than would IV PREFACE. have been proper in a book intended only to be used for legal reference. Further, I have sought, wherever it seemed desirable, to give a somewhat extended statement of cases, often embodying the language of the court, with the object of giving to this volume in some degree the value which belongs to a collection of cases. The subject is too extensive to be satisfactorily treated by a publication at length of all cases relating to banks ; on the other hand it is not so extensive as to justify its treatment in the shape of a digest. Mr." Thompson whose labors have been a great aid to me, has made a somewhat bulky volume by bringing together upon the former system only such cases as relate to our national banks. I hope that the middle course, which I have adopted, as it has appeared the only one practicable, may also prove to be satisfactory. JOHN T. MORSE, Jb. Boston, May 24, 1879, PREFACE. TO FIRST EDITION. Questions in relation to banking law, involving interests of great magnitude, have of late arisen in unusual numbers. But those engaged in investigating them have been cast upon the trackless wilderness of the reports, without guide or aid of any description from treatises or text-books on the subject. English works are nearly useless on this side of the water, since English legislation and usages differ widely and materi- ally from our own. No thorough and sufficient book has ever been attempted by an American writer. It seemed to me that there was not only room but even a necessity for such an undertaking ; and when I entered upon the task and found how it grew and expanded upon investigation ; when I found how maily doctrines of the law had been expounded, having reference solely to the banking business, which had never been brought together and elucidated in connection with each other, or upon any uniform principle ; when I found what multitudes of cases had arisen and been adjudicated which had never been collected, compared, or criticised, which might be overlookfed, overruled, practically lost to the profession, I learned that the need for such a work as I contemplated was even far greater than I had believed it to be. How well I have met the demands of my task I cannot pre- tend to judge. That imperfections should exist in my work may be regarded as inevitable. It is almost an impossible VI PREFACE. achievement to discuss in an absolutely exhaustive manner a broad legal topic where the footsteps of no predecessor serve to guide or to warn. It cannot be expected of the pioneer that he should finish his work beyond the possibility of im- provement. I know that I have fallen far short of such a consummation ; and I must rest satisfied if what I have done shall prove substantially useful, and shall betray no greater want of finish than may be deemed justly unavoidable and pardonable in so difficult a labor. JOHN T. MORSE, Jr. 16 Pembeeton Square, Bostok, Jan. 9, 1870. TABLE OF CONTENTS. FAGB Definitions xxy CHAPTER I. The Franchise, and General and Implied Powers thereunder 1 CHAPTER H. Depositors and Customers 28 CHAPTER HI. Powers, Duties, and Liabilities of Officers and Agents . 77 CHAPTER IV. Official Bonds 208 CHAPTER V. Checks 249 CHAPTER VI. Collection 384 CHAPTER VII. Usages and Customs 433 CHAPTER Vni. Bane Bills or Kotes 453 CHAPTER IX. Shareholders. 488 Vlll TABLE OP CONTENTS. CHAPTER X. Rights op Action against Banes 519 CHAPTER XI. Evidence 540 CHAPTER Xn. National Banes 551 Appendix. (United States Statutes as to National Banes) 597 Index 651 TABLE OF CASES. PAQB Abbott V. Agricultural Bank 466 Abrahams v. Southwestern R. R. Bank 461, 483 Adams v. Dannis 670 V. Mayor, &c. of Nashville 689 V. Orange County Bank 41 V. Otterback 435 ^tna Insurance Co. ». Alton City Bank 409, 415 ^tna Nat. Bank v. JFourth Nat. Bank 530, 537 Agnevr v. Bank of Gettysburg 3 Agricultural Bank v. Burr 489, 491 V. Commercial Bank 409 V. Kobinson 24 Agra & Masterman's Bank, In re ; Exp. Waring 29 Albert v. Savings Bank 117 Alexander v. Burchfleld 259, 260, 281, 282, 390, 393, 395, 396 V. Mackenzie 88 Alexandria Canal Co. v. Swann 144 Alleghany Bank's Appeal 302 Allen V. Dundas 291 V. First Nat. Bank of Xenia 16, 661, 566 V. Keeves 372 V. Merchants' Bank 406,407,415, 418, 420 Alliance Bank v. Kearsley 297 Allison V. Farmer's Bank 213, 217, 221 V. Hubbell 16 American Bank v. Adams 209, 218, 217 V. WaU 461, 463 American Ins. Co. v. Oakley 144 Ames V. Meriam 283, 370 Amherst Bank v. Boot 235, 236, 245 Amis V. Witt . 382 Ancona v. Marks 534, 535 Anderson v. Thornton 220 Andrews v. Blackley 262 ' PAGS Andrews v. Kneeland 93 V. President, &c. of SuflTolk Bank 99 Armat v. Union Bank 476 Arnold v. Suffolk Bank 506 Arthur V. Commercial & K. E. Bank of Vicksburg 490 Atlantic Bank v. Merchants' Bank 79, 80, 102 Atlantic Nat. Bank v. Harris 97, 566 Attorney-General v. Bank of Niagara 3 V. Utica Ins. Co. 1, 3 V. Wilson 133 Atwood II. Bank of Chillicothe 468 V. Rhode Island Agricultural Bank 602, 503, 505 Aubert v. Walsh 306, 323, 369, 551 Augusta Bank v. Hamblet 148 Austin t>. Daniels 193, 196 c. The Aldermen 692, 596, 696 B. Bacon v. Robertson 511 Badger v. Barik of Cumberland 154, 158, 192 Bailey v. Bacon 461 V. Bodenham 281, 396 V. Sawyer 683 Baird v. Bank of Washington 106, 115, 118, 120 Baker v. Atlas Bank 495, 502 Baldwin v. Bank of Louisville 409,415 V. Bank of Newbury 154, 156, 176 Ballard v. Fuller 375 Ballston Spa Bank v. Marine Bank 162, 164, 483 Bandal v. Isaac 19 Bank v. Kennedy 677 V. Lanier 553, 174 TABLE OP CASES. Bank Commissioners i>. Bank of Brest • 122 V. Bank of Buffalo 110, 116, 123, 124, 135 V. Lafayette Bank 468 V. St. Lawrence Bank 64, 160 Bank of Attica v. Manufacturers' & Traders' Bank 506 Bank of Augusta v. Earle 4 Bank of Australasia v. Breillat 3, 120 Bank of Bethel v. Fahquoique Bank 570, 576, 579 Bank of Brighton v. Smith 232 Bank of Carlyle v. Hopkins 232 Bank of Chillicothe v. Dodge 64 K. Swayue 11,20 Bank of Columbia v. Fitzhugb 397 V. Magruder 398, 436 V. Patterson's Adm'r 12, 13, 72, 77,80 Bank of Commerce v. Union Bank 328, 331, 344, 348 Bank of the Commonwealth of Kentucky v. Wister 58, 479, 517, 518 Bank of Delaware County v. Broomhall 431 Bank of England v. Anderson 809 Bank of Genesee v. Patchen Bank 11, 104, 168, 170, 552 Bank of Ireland v. Trustees 345, 346 Bank of Kentucky v. Hickey 467 V. Schuylkill Bank 119 Bank of Louisville v. Bank of Newark 574 V. Summers 473 Bank of Metropolis v. Jones 189 V. New England Bank 421, 425 Bank of Middlebury v. Bingham 16, 20 o. Rutland & Washington B. E. Co. Ill Bank of Missouri v. Benoist 41, 42 Bank of Mobile v. Huggins 401 V. Meagher 473 Bank of Monroe v. Field 645 Bank of Niagara v. Johnson 135 V. McCracken 467 Bank of Northern Liberties v. Cresson 282, 284, 802 V. Jones 29 Bank of Orleans v. Merrill 64 V. Smith 420, 427 Bank of Pennsylvania v, Farns- worth 64 V. Eeed 154, 161, 180 Bank of Pittsburg v. Whitehead 125, 126 Bank of Foughkeepsie v. Ibbotson 602 Bank of the Republic v. Millard 29, 30, 356, 538 Bank of South Carolina v. Rose 543 Bank of St. Albans v. Farmers' and Mechanics' Bank 327, 328, 380, 838, 343 Bank of St. Mary's v. Calden 374 V. St. John 133, 478, 490, 498 Bank of the State ». Burton 70 V. Comegys 193 V. Ford 22 Bank of the State of New Tork v. Muskingum Branch of Bank of State of Ohio 169,306 Bank of the United States v. Bank of Georgia 54, 190, 329, 330, 331,345, 460 V. Dandridge 106, 234 V. Davis 21, 117, 126, 401 V. Dunn 110, 189 V. Goddard 401 V. Maealester 42, 300, 377, 478 V. Planters' Bank of Georgia 517 V. Sill 475, 476 V. Steams 541, 552 V. Waggoner 19 Bank of Utica v. Magher 3, 175 V. Smalley 606 Bank of Vergennes v. Warren 86, 154, 159, 179, 180 Bank of Virginia v. Ward 476 Bank of Washington v. Barring- ton 228, 229, 232, 243 V. Triplett 398, 401, 408, 411, 417, 425, 439 Bank of Wilmington and Brandy- wine V. WoUaston 241, 242 Bank of Wooster v. Stevens 11, 20 Banks v. Darden 189 V. Poitiaux 9 Barber v. Gingell 296, 328, 357 Barely v. Lucas 215 Barfoot v. Goodall 551 Barker v. Parker 215 Barnes v. Ontario Bank 5, 64, 66, 108, 162, 200, 313, 447 Bamet v. Smith 816 Barnett v. Brandao 45 Barney v. Newcomb 176 Barough v. White 283 Barratt, Exp. 32 Barrick v. Austin 165 Barrington :;. Bank of Washington 211 Bartholomew v. Bentley 125 V. Henley 380 Bass V. Cline . 828 Bates V. State Bank 17 Bay V. Coddington 479 Beak's Estate, In re 381 Beck V. Gillis 85 Beckwith v. Union Bank 42, 45 Bedford R. R. Co. v. Bowser 119 Beers v. Phcenix Glass Co. 92 Begbie v. Levy 264 Belcher v. Wilcox 498 Belknap v. Bank of North Amer- ica 345, 346 Bellamy v. Majoribanks 29, 345, 525 Bellemire v. United States Bank 412, 416 TABLE OP CASES. XI Bellows a, Hallowell & Augusta Bank 27 Bennett, Exp. 115 Benson v. Heathorn 116 Bellows Falls Bank v. Rutland County Bank 41, 65 Bemheimer v. Marshall 828, 332, 838 Biokford v. Eirst Nat. Bank of Chicago 275, 280, 281, 292, 296, 811, 818, 854 Bignold, Exp. 225 Billing V. Devaux 259 Bird's Executors v. Cockrem 569 Bishop V. Countess of Jersey 29 Blanchard v. Hilliard 397 Bleasly v. Crossley 323 Blodgett V. Morrell 489 Board of Commissioners of Mont- gomery Co. V. Elston 685 Board of Commissioners of Rice County V. Citizens' Nat. Bank of Faribault 586 Boatman's Savings Inst. u. Bank of Missouri 469 Boddington v. Schlencher 280, 890, 393 Bodenham v. Hoskins 49 V. Purchas 80, 82 Boehm v. Sterling 260, 286 Boisgerard v. New York Banking Co. 14 Bolton V. Puller 42 V. Richards 878 Bomp V. Nininger 417, 446 Bonar v. Macdonald 241 Bond, Exp. 101 V. Appleton 494 V. Bank of Georgia 17 Boom V. City of Utica 80 Boston Hat Manuf. v. Messinger 226 Boswell V. Smith 651 Boutts V. Ellis 381 Bowden v. Morris 582 V. Santos 583 Boweu V. Newell 262, 265, 897, 441, 442 Bowling V. Arthur 409, 415, 416 Bowman v. Cecil Bank 484 Boyce v. Edwards 317 Boyd V. Emerson 879, 380 Boylston Nat. Bank v. Richardson 270 Bradford v. Fox 289" Bradley v. Bank of the State 16 V. Delaplaine 262 V. Hamilton 263 V. Hunt 460 Branch v. Roberts 482 V. The United States 668 Branch Bank v. Knox 401 V. Poe 160 V. Scott 142 V. Steele 117 Branch Bank at Mobile v. Collins 142 Brandao v. Barnett 8, 42, 44 Brandon v. Scott 290 Brent v. Bank of Washington 507 Bridenbecker v. Lowell 161 Bridgeport Bank v. Dyer 436, 449 V. New York & New Haven R. E. Co. 513 V. Schuyler 513 Bridges v. Hawkesworth 480 Bridgman v. Gill 40, 800 Briggs V. Fenniman 502 Brind v, Hampshire 803 Brine v. Ferrier 380 Briscoe v. Bank of the Common- wealth of Kentucky 486 Bristol V. Barker 2 Bristol Knife Co. v. First Nat. Bank of Hartford 280, 840 Brittain v. Bank of London 858 Bromley v. Brunton 382 Brouwer v. Appleby 148 Brown, In re 261 V. Davies 285 V. Leckie 275, 311, 322, 534 V. Lusk 262 V. Second Nat. Bank of Erie 664 Bruce v. Bruce 345 Bruyn v. Receiver 50, 463 Bryant v. Damariscotta Bank 467 Bryden v. Bryden 289 Buckley, Exp. 298 Buell V. Warner 615 Buffalo City Bank v. Codd 484 BuUard v. Bank 574 V. Bell 463, 479 V. Randall 29, 184, 275, 308, 310, 527, 528 Bullet V. Bank of Pennsylvania 476 Bull V. Morrill 296 Bum, Exp. 82 Burnes v. Pennell 188 Burnham v. Webster 153 Burridge v. Geauga Bank 473 Burrill v. Nahant Bank 108 Burroughs v. Lowder 232 Burrows v. Smith 555 Burton v. Payne 824 Bushnell v. The Chautauqua County Nat. Bank 559 Butterworth v. Peck 275, 627 Butts V. Wood 115 c. Cabot Bank v. Morton 830, 483 Cadle V. Baker 678 V. Tracy 670 Cake V. First Nat. Bank of Leb- anon 565 Caldwell v. Nat. Mohawk Valley Bank 66, 180, 559 Calisher v. Forbes 434 Camden v. Doremus 437 Camidge v. Allenby 271, 284 Campbell v. Mississippi Union Bank 460 xu TABLE OP CASES. Can II. Read 291, 300 Canficid u. State Nat. Bank 558 Canal Bank v. Bank of Albany 338, 842, 344, 350, 354 Carew, In re 126 V. Duckworth 260, 285 Carey v. Greene 473 V. McDonald 16 Carpenter v. Butterfield 463 V. Farnworth 292, 296 V. Northfleld Bank 63, 271 Carr v. Carr 29 I). National Security Bank 80, 530 Casco Bank v. Keene 359 Case V. Citizen's Bank of Louis- iana 676, 579 V. Henderson 530 V. Mechanics' Banking Assoc. 256 i>. Terrell 579 Casey v. Galli 577, 582 V. La Society de Credit Mo- bilier de Paris 579 Cats V. Patterson 64 Cecil Bank v. Farmers' Bank 421, 423 Central Bank v. Davis 440 V. Empire Stone Dressing Co. 105, 106 Central Nat. Bank v. Bichland Nat. Bank 672 Central Nat. Bank of New York V. Pratt 563 Chambers v. Miller 270 Chandler v. Monmouth Bank 142 Chapman ». Beckington 215 V. Hart 460 V. White 29, 261, 275, 386, 525, 627 Charleston v. People's Nat. Bank 557 Chatham Nat. Bank v. Merchants' Nat. Bank 569 Chattahoochee Nat. Bank v. Ocean Nat. Bank 6fi V. Schley 68 Chemical Nat. Bank v. Bailey 519, 576, 579, 581 Chesapeake Bank ». First Nat. Bank of Baltimore 571 V. Swain 71, 643, 650 Chetwood, at the suit of the Presi- dent, &c. of the State Bank 244 Chicago Marine and Fire Ins. Co. V. Carpenter 53 V. Stanford 36, 534 Chicopee Bank v. Eager 397, 436 Child V. Hudson Bay Co. 440 Chouteau o. Rowse 282 Chowne v. Baylis 247 Citizen's Bank v. Howell 409 City Bank v. Beach 4 V. Cutter 898, 436, 449 V. Perkins 165, 166, 180 City Nat. Bank v. Paducah 587, 596 City of Richmond v. Scott 589, 953 Claflin V. Farmers' & Citizens' Bank 207 Clancarty v. Latouche " 73, 74 Claridge v. Hoare 246 Clark V. Hawkins 464 V. Metropolitan Bank 23 V. Merchants' Bank 424 V. Stackhouse 283 Clark Nat. Bank v. Bank tof Albion 81, 203, 205 Glutton, Exp. 81 Cocheco Nat. Bank v. Haskell 175 Cochituate Bank v. Colt 480, 497 Cocks V. Masterman 38, 341, 842 Codd V. Rathbone 2 Coddington v. Bay 423 Coffin V. Henshaw 36 Coffi-ey v. Nat. Bank of the State of Missouri 655 Cohen v. Hull 806 Coggill V. American Exchange Bank 264, 345, 350, 354 Cole V. Ryan 492 Coleman o. White 602 Coles V. Bank of England 345 Collins, Exp. 291 V. Central Bank 462 V. Chicago 585 ». Emett 254 Colt V. Noble 401 Commercial & Farmers' Nat. Bank D. First Nat. Bank of Baltimore 328, 337 Commercial Bank v. Benedict 476 Commercial Bank of Albany v. Hughes 29, 30, 32, 42, 310 Commercial Bank of Buffalo v. Kortright 86, 154, 178, 179 ». Union Bank 406, 429, 430 Commercial Bank of CleTeland v. Simmonds 569 Commercial Bank of Columbus v. Thompson 461 Commercial Bank of Clyde v. Ma- rine Bank 428 Commercial Bank of Manchester V. Bonner 89, 142 Commercial Bank of Natchez v. State 24 Commercial Bank of Scotland v. . Rhind 58 Commercial Mut. Marine Ins. Co. V. Union Mut. Ins. Co. 87 Commercial Press v. Crescent City Nat. Bank 307 Commonwealth v. Burry 584 V. Cochituate Bank 495 V. Commercial Bank 24 V. Felton 584 V. Tenney 583 Comstock V. Willoughby 6 Conant v. Seneca County Bank 24, 133, 607, 615 Concord v. Concord Bank 30, 32, 158, 553 TABLE OP CASES. XIU Conklin v. Second Nat. Bank 506, 675 Conroy ». Warren 281, 282, 284, 368 Contant v. Schuyler 381 Continental Nat. Bank v. Nat. Bank of the Commonwealth 859 Conwell V. Hill 468 Conyngham's Appeal 116, 197 Cook V. State 229 Cook V. Seely 297 0. Wagster 35 Cooke «. State Nat. Bank of Bos- ton 203, 205, 308, 570, 571 Cookendorfer v, Preston 439, 541, 543 Coolidge V. Payson 530 Cooper V. Curtis 106, 165, 198 V. Mowry 41, 42 Corbit V. Bank of Smyrna 53, 54, 460 Corgan v. Frew 252 Corlett V. Conway 315 Corser v. Craig 527 V. Paul 166 Coulter V. Kobertson 511 Cowell V. Simpson 46 Cowles V. Cromwell 492 V. Gridley 489 Cowperthwait v. Sheffield 525 Craig «. State of Missouri 64,487 Crease v. Babcock 499, 502 Creed v. Commercial Bank 17 Crocker v. First Nat. Bank of Che- topa 563 V. Marine Nat. Bank 571 V. Whitney 566 Crocket ». Young 165 Cromwell v. Lovett 280, 284 Croskill ». Bower 29, 73, 75 Crow V. Mechanics' and Traders' Bank 430 Cruger v. Armstrong 281, 282, 283, 368, 553 Cullen ». Thompson 137 Cummings v. Shand 447 Connecticut & Passampsic Biver R. B. II. Bailey 489 Cundy ». Mariott 14 Curcier v. Pennock 542 Curry v. Scott 512 CurrLn v. State of Arkansas 517, 518 Curtis V. Leavitt 1, 5, 6, 12, 14, 29, 64, 66, 103, 132, 401 V. Swartwout 9 Cashing v. Gore 37 Custer V. Tompkins County Bank 126 D. Daly «. Butchers' & Drovers' Bank of St. Louis 385, 410 Dana v. Bank of the United States 122 V. Third Nat. Bank 275, 376, 625, 527 Daniels v. Kyle 262, 284 Darrington v. Bank of the State of Alabama 486 Da Silva v. Fuller 373 Davenport v. City Bank of Buffalo 483 Davis V. Bowsher 42 V. Cook 569 V. Randall 149, 563 Dawson v. Real Estate Bank 42, 47, 49, 66, 70 Dayton v. Borst 492 Dearborn v. Union Nat. Bank 69 De Bernales v. Fuller 39 Dedham Bank v. Chickering 226, 235 De Haven v. Kensington Nat. Bank 69 V. Williams 292 Delafield v. Kinney 145 Delaware & Hudson Canal Co. a. Penn. Coal Co. 106 Deters v. Harriot 285 Devaynes v. Noble 29, 30, 32, 59 Dickinson v. Evans 46S Diven v. Lee 496, 504 t). Phelps 463, 464 Dodge V. Nat. Exchange Bank 538 Dick V. Levirich 254 Dixon V. Nuttall 261 Dodge V. Nat. Exchange Bank 337, 351, 855 Dorchester & Milton Bank ». New England Bank 898, 399, 409, 435 Dougherty v. Hunter 91 V. Western Bank 467 Down V. Hailing 261, 283, 370 Downer v. Madison County Bank 406, 430 Downes v. Phoenix Bank 29, 36, 519 Dry V. Davey 214 Dufnar v. Oxenden 315 Duff V. East India Co. 299 Duncan v. First Nat. Bank of Mt. Pleasant 562, 565 Dunham v. Gould 17, 445 Dunkle v. Rennick 21 Dunlap V. Smith 461 Duns ton v. Imperial Gas Co. 141 Durkin v. Exchange Bank 199, 220 Dutchers v. Importers' and Trad- ers' Nat. Bank 275 Duval V. Farmers' Bank 485 Dykers v. Leather Manufacturers' Bank 803, 310, 372 E. Eagle Bank ». Chapin 401 East Haddam Bank ». Scovil 409, 427 East of England Banking Co., In re 284 East Biver Nat. Bank v. Gove 52, 90, 96 Eastman v. Commonwealth 463 V. Coos Bank 89, 160 Easton v. Pratchett 363 XIV TABLE OP CASES. Edgerly v. Emerson 112, 553 Edmunds v. Digges 485 Edwards v. Morris 460 Egg V. Barnet 551 Eiehelberger v. Finlay 374 Eidman !>. Bowman 111, 512 Elder v. First Nat. Bank of Ot- tawa 16, 561 Elliott V. Abbott 112, 166 Ellis V. Wheeler 368 Ellis & Morton v. Ohio Life Ins. & Trust Co. 334 Elting V. BrinkerhoS 284 Elwell V. Dodge 91, 169, 180 Emery v. Hobson 288, 307 Empire City Bank, In re 493, 494, 496, 500, 504 Erwin v. Branch Bank at Mobile 176 Espy V. Bank of Cincinnati 259, 316, 317, 319, 866 European Bank, In re 45 Evans v. Hallam 279 Evansville Nat. Bank v. Metropoli- tan Nat. Bank 574 Everett v. United States 165 Exeter Bank v. Rogers 218, 228 Eyre, Exp. 44, 100 Fabins v. Mercantile Bank 401, 415, 417 Fairlie v. Hastings 190 Farley v. Turner 34 Farmers' Bank v. Burchard 19 V. Duval 400 V. Inglehart 506, 508 V. McKee 148 V. Owen 419 V. Reynolds 476, 477 V. Vail 401 Farmers' & Mechanics' Bank ». Baldwin 7, 445 V, Butchers' & Drovers' Bank 157, 203, 205, 206, 313, 314 V. Champlain Transportation Co. 7, 81, 514, 541 V. Planters' Bank 41, 42 V. Smith 444 ti. Troy City Bank 155, 176, 190 Farmers' & Mechanics' Nat. Bank V. Dearing 554, 563 V. King 300, 302 Farmers' & Traders' Bank v. Har- rison 20 Farrar v. Oilman 179 Fawcett v. Laurie IHi Fernandez v. Glynn 268, 456 Finnucane v. Small 99 First Nat. Bank v. Douglas County 586, 598 V. Graham 69 V. Hershire 596 First Nat. Bank v. Merchants' Nat. Bank 316, 322 V. Ocean Nat. Bank 30, 66, 69, 85, 555 V. Peterborough 585 i>. Ricker 328 First Nat. Bank of Charlotteville V. National Exchange Bank of Baltimore 6, 558 First Nat. Bank of Chicago v. Pettit 530, 537 First Nat. Bank of Columbus v. Garlinghouse 563 First Nat. Bank of Fort Dodge v. Haire 567 First Nat. Bank of Jersey City v. Leach 275, 313 First Nat. Bank of Mendota v. Smith 591 First Nat. Bank of Omaha v. Douglas County 587 First Nat. Bank of Rochester v. Harris 6 ti. Pierson 7 First Nat. Bank of Sandy Hill v. Fancher 586 First Nat. Bank of Whitehall v. Lamb 563 Fishmongers' Company v. Robert- son 77 Fleckner v. Bank of the United States 12, 17, 18, 21, 77, 80, 108, 148, 176, 445 Fletcher v. Manning 323 Flint V. Board of Aldermen of. Bos- ton 593 Fogarties v. State Bank 633 Foley V. Hill 29, 33, 76 Folger V. Chase 168 Ford V. Mitchell 65 V. Thornton 42 Forster v. Clements 328 V. Essex Bank 27, 149, 485, 516 Fort V. Bank of Cape Fear 53 Foster v. Bank of London 57, 274 V. Bank of New Orleans 53, 70 V. Essex Bank 18, 29, 66, 67, 68, 72, 97, 98, 401 V. Shattuck 254, 353 V. Wilson 461 Fourth Nat. Bank of Chicago v. City Nat. Bank of Grand Rapids 46, 584 Fowler v. Scully 566 Frank v. Edwards 241 Frankfort Bank v. Johnson 79, 119, 120 Franklin Bank, In re 56 V. Cooper 231, 232, 237, 238, 544 V. Freeman 371, 841 V. Stevens " 238, 239, 240 V. Steward 86, 156, 164, 644, 545 Frazier v. Erie Bank 300 Frowde, Exp. 137 TABLE OP CASES. XT Fruhling ». Schroeder 303, 316 Fryer v. Rankin 35 Fuller V. Hutchins 256 V. Smith 38, 333 Fulton Bank ». Benedict 126 V. New York & Sharon Canal Co. 80, 125, 126, 130, 147, 149, 295 V. Phoenix Bank 460 Fulweiler v. Hughes 256 G. Gaffney v. Colvill Gallatin v. Bradford Gardner v. Post V. Walsh Garrison v. Howe 515 444 552 849 500 Gathwright v. Callaway County 232 Georgia Manuf. & Paper Mill Co. V. Amis 491 Georgia Nat. Bank v. Henderson 262, 388 Gerhardt v. Boatman's Savings Inst. 411, 417 Giblin v. M'MuUen 67, 98, 100 Gibson v. Goldthwaite 146 V. Minet 303 Giles i: Perkins 42, 45, 428 Gillard v. Wise 460 Gillett V. Campbell 103, 105, 180 V. Phillips 132 Gindat v. Mechanics' Bank 436 Girard Bank v. Bank of Penn Township 41, 199, 202, 310, 313, 314 Gladstone v. Tempest 380 Glen V. Noble 368 Gloucester Bank v. Salem Bank 54, 99, 331, 367, 482 Godbold V. Branch Bank 138, 134, 141 Goddard v. Merchants' Bank 829, 840, 841 Godin V. Bank of the Common- wealth 373 Goldsbury v. Inhabitants of War- wick 594 Goldsmid v. Lewis County Bank 479 Goodbody v. Foster 75 Goodloe V. Godley 89, 90, 396 Goodman v. Simonds 256 Gough V. Staats 284, 394 Governor v. Allen 232 Grand Gulf Bank v. Archer 25 Graniteville Manuf. Co. v. Boper 461 Grant, In re 115 V. Mechanics' Bank of Phila- delphia 508 V. Vaughn 345, 369 Graves v, American Exchange Bank 848, 850, 352, 867 t>. Lebanon Nat. Bank 235, 240, 248 Gray v. Johnston 37 Gray v. Portland Bank 111,512 Gray's Adm'r v. Bank of Een- tucky 256 Green v. Sizer 70,72 V. WalkiU Nat. Bank 579 Grew V. Breed 480, 497, 499 , 501, 502 Griffin v. Central Bank 462 V. Bice 38, 449 Grigby v. Oaks 460 Grinnell v. Suydam 525 Grocers' Bank v. Kingman 232, 241, 243 246, 247 Grocers' Nat. Bank v. Clark 556 Grymes v. Howe 382 Gumble v. Abrams 53,70 Gunkle's Appeal 184, 136 Gwyn V. Godby 73,75 H. Hager v. Union Nat. Bank 507, 512, 574, 575 Hagerstown Bank v. Adams Exp. Co. 473 V. London Savings Fund Soc. 194 Hall t>. Fuller 845, 348 V. Huse 357 V. Smith 298 V. Vermont & Mass. B. B. Co. 141 Hallett V. narrower 2 Hallowell & Augusta Bank v. Howard 461, 463 Halls B. Bank of the State 385,403 Handy ». Dlbdin 460 Harbeck v. Craft 281, 282 Hardy v. Veasey 57 Hare v. Copland 261, 351 V. Henty 281, 390, 434 Hargroves v. Chambers 136, 139, 151 Harker v. Anderson 261, 872 Harmanson v. Bain 255 Harper v. Calhoun 179 Harrington v. First Nat. Bank of Chittenango 559 Harris v. Bradley 354 !). Clark 881, 382, 525, 527, 528, 533 ». First Parish in Dorchester 502 V. Lane 497, 502, 503 • Harrisburg Bank v. Common- wealth 485 V. Forster 197 V. Tyler 188, 189, 300 Hartford Bank v. Barry 160, 167 V. Hart 80, 89, 544 V. Stedman 397 Haxton v. Bishop 463, 467 Haynes v. Birks 401 Hays B. Northwestern Bank 3 Heming v. Clutterbuck 380 Henman v. Dickinson 359 Henniker v. Wigg 80, 32, 35, 48 Hepburn v. School Directors 589, 592 XVI TABLE OP CASES. Herrick v. Whitney 483 Bershire v. First Nat. Bank 688, 593 Hewett V. Adams 497, 505 V. Kaye 881 /Hewison v. Guthrie 46 Higby V. First Nat. Bank of Beverly 564 Hill V. Pine Eiver Bank 508 V. Royds 39. 538 Hinsdale v. Bank of Orange 473, 476 V. Lamed 467, 474, 482 Hintermisher v. First Nat. Bank 563 Hodges V. New England Screw Co. 133 Holland v. Lewiston Falls Bank 150 HoUister v. HoUister Bank 503, 511 HoUister Bank, In re 502, 603 Holt V. Bacon 165 Hooker t>. Eagle Bank 89, 96 Hopkins v. Ware 282 Hopkinson v. Forster 275 Borne v. Greene 585 Hotchkiss V. Artisans' Bank 447, 448 Houghton V. First Nat. Bank of Elkhorn 169, 187 Howard v. Ives 401 Howell V. Village of Cassapolis 592 Howland v. Myer 180 Hoyt V. Seely 368 V. Thompson 91, 147 Bughes V. Bank of Somerset 79, 246 Hultz V. Commonwealth 243 Humphries v. Bicknell 368 Hungerford Nat. Bank v. Van Nostrand 573 Hunt V. Divine 2, 65 V. Van Alstyn 145 Hunter, Exp. 291 Huntress v. Patten 541 Husband v. Davis 290 Bussey v. Manufacturers' Bank 512 Hyde v. Planters' Bank 409, 415 I. Iken V. Bradley 73, 75 Ingham v. Primrose 277 Ingraham v. Maine Bank 229 V. Speed 9 Inhabitants of Farmington v. Stan- ley 239 Innes v. Stephenson 290 Irons V. Manufacturers' Nat. Bank 576 Irving Bank v. Witherald 205, 320 Irwin V. Lumberman's Bank 542 Ivory V. Bank of the State of Mis- souri 403 J. Jacks V. Darrin 308 Jacksim v. Bank of the United States 302, 641 V, Brown 9 Jackson ». Union Bank 409, 415 Jacobsohn v. Belmont 893 Jameson v. Swinton 434 Jefferson County Bank v. Chstp- man 463, 464, 467 Jenkins v. Nat. Village Bank 69 Jenys v. Fowler 328 Johns V. Mason 370 Johnson v. Catlin 176 V. Farmers' Bank 41, 63, 541, 546 V. Frankfort Bank 226, 229 V. Laflin 574 V. Windle 345 Johnston v. Southwestern E. R Bank Jones V. Fales V. Hawkins V. Nicholay V. Peppercorne V. Ryde u. Wittberger Jose V. Hewett Jourdaine v. Lefevre Joy V. Campbell K. 489, 501 897 16 380 42 54, 345, 354 498, 502 237 42 43,45 Kansas Valley Nat. Bank of To- peka V. Howell 566 Kearney v. King 252 Keene v. Beard 257, 258, 260, 806, 308. 368, 369 Kelley v. Brown 371 Kelsey v. Nat. Bank of Crawford 555, 556 Kemble v. Mills 260 Kennedy v. Gibson 560, 570, 677 Kilgore v. Bulkley - 64 Kilsby V. Williams 379 Kimball v. Cleveland 165 King, In re 380 V. Dedham Bank 467 V. Elliott 490 Kingston, Ex parte ; In re Gross 34 Klopp V. Lebanon Bank 507, 509 Knight V. Old Nat. Bank 575 Knights V. WifSn 359 Kuhns V. Westmoreland Bank 510 Kyle V. The Mayor, &c. 693 Kymer v. Laurie 37, 521 Lackey v. Miller 466 Lafayette Bank v. State Bank 176 Lancaster Bank v. Smith 66, 67 ». Woodward 283, 286, 289, 323, 375, 446 Lancaster Nat. B^nk v. Taylor 363, 364 Lane v. Morris 493, 498, 499, 505 Lanfear v. Blossom 429 TABLE OP CASES. XVll Langdale v. Whitfield Langton v. Lazarus Laughlin v. Marshall Lawler v. Burt Lawrence v. Gebhard V. Schmidt 35 869 64 484 91 269 17. Stonington Bank 409, 419, 424 Laws V. Rand 258, 281, 282 Lawson v. Lawson 881 Leach v. Buchanan 857 V. Hall 67, 559 Leavitt v. Beers 150 V. Fisher 146 B. Palmer 11, 64 V. Yates 6, 6, 103, 500 Leazure v. Hillegas 10 Lef tley v. Mills 268 Leggett V. Bank of Sing Sing 606, 608 V. New Jersey Manuf. Bank- ing Co. Ill, 147' Lemmon v. Box 816 Lester v. Howard Bank 117 Levy V. Bank of the United States 341, 378 V. Pyne 296 Lewis V. Eastern Bank 121, 648 B. llobertson 488, 490 Lilly V. Hayes, 316 Lime Rock Bank v. Hewett 21, 190, 436, 437, 644, 553 V. Macomber 89, 96 Lincoln & Kennebeck Bank v. Page 897,436 B. Richardson 27 Lindauer v. Fourth Nat. Bank 423 Lindsay v. Lord Downes 238 B. McClelland 64, 65 Lionberger v. Rouse 588, 590 Litchfield Bank b. Church 489 Little B. Phoenix Bank 257, 281, 282, 287, 369 Lloyd B. McCaffrey 526, 628 B. Sandilands 806, 823, 869, 561 B. West Branch Bank 69, 86, 91, 94,97 Loan Association v. Stonemetz 141 Locke B. Prescott 45 Lockwood V. American Nat. Bank 575 Lohman v. New York & Erie R. R. 91 Loomis B. Eagle Bank of Roches- ter 126, 128, 544 Lord Bolingbroke's Case in Joy b. Campbell 43 Loughman b. Barry 376 Louisiana State Bank b. Senecal 126 Lovett V. Cornwell 303 B. Steam Saw Mill Assoc. 179 Loyd B. Freshfield 57 Lucas V. Dorrein 44 V. Governor's Nat. Bank of Pottsville 563, 565 Luff V. Pope 525 Lumley v. Palmer 816 Lunt B. Bank of North America 275, 527 Lyman v. United States Bank 131 Lyon B. Jerome 109 M. Mabey v. Adams 188 Macbean b. Irvine 148 Mackersy B. Ramsey 407,418,426 Madison & Indianapolis R. R. Co. V. Norwich Savings Soc. 80, 103 Magruder v. Colston 583 Mahaiwe Bank v. Douglass 845, 848, 849, 363, 447 Main v. Second Nat. Bank 670 Maine Bank b. Butts 74 Malcolm b. Scott SO, 808, 319, 525 Mandevile b. Union Bank 88 8. Welch 381, 625, 527, 528, 681, 633 Manhattan Co. v. Lydig 52, 68, 90, 96, 548, 668 Mann v. Mann 35 B. Pentz 491 Manning b. Purcell 35 B. Westeme 34 Manningford b. Toleman 45 Manufacturers' Nat. Bank, In re 575 V. Baack 669, 670 u. Barnes 61, 881, 858 Marine Bank b. Biays 514 ». Clements 169 B. Fulton Bank 30,>82 Marine Bank of Chicago v. Birney 53 V. Chandler 53, 66 B. Ogden 53, 271 B. Rushmore 63, 384 Marine Nat. Bank v. Nat. City Bank 319, 344, 364 Marine & Fire Ins. Bank v. Jaun- cey 525 Market Bank v. Hartshome 377 Markle v. Hatsfleld 54, 483 Marquis of Abercorn, Exp. 117 Marsh b. Oneida Central Bank 29, 42, 47,60 Martin w. Bank of the United States 474, 476, 478 B. Morgan 270, 372 Marvine v. Hymers 176 Marzetti b. Williams 36, 520, 522 Master b. Miller 359 Matthew b. Sherwell 279 Matthews v. Skinker 568 Maule B. Brown 390 Mauran b. Lamb 368 Maury b. Ingraham 24, 479 Mayall b. Boston & Maine R. R. Co. 81 Maynard v. Bank 555, 556 B. Newman 70 Mayor b. Johnson 476 V. Thomas 696 XVUl TABLE OP CASES. MeBride v. Farmers' Bank 423, 425 McCagg V. Woodman 47, 50 McDougald v. Bellamy 122, 481, 601 V. Lane 489, 498 McDowell V. Bank of Wilmington & Brandy wine 42, 47, 440 Mclver !'. Bobinson 595 McKinster v. Bank of Utica 401, 403, 428, 480 McLean v. Lafayette Bank 17, 21, 446, 510 McVeagh v. City of Chicago 696 Meach v. Meach 882 Meacher v. Fort 350 Mead v. Engs 401 V. Young 348, 353 Meads v. Merchants' Bank of Al- bany 208, 313 Mechanics' Bank v. Bank of Co- lumbia 16, 98, 164 V. Earp . 412, 417,427, 508, 510 V. Merchants' Bank 431 V. Straiten 255 Mechanics' Bank of Alexandria v. Bank of Columbia 77, 125, 171, 175 V. Seton 507 Mechanics' Banking Assoc, v. New York Saugerties Lead Co. 104, 169 Mechanics' & Farmers' Bank v. Smith 59 Medewe, In re 44 Medomak Bank v. Curtis 12 Meighen v. Bank 542, 543, 546 Melville v. Doidge 224 Merchants' Bank v. Central Bank 16, 164 V. Cook 614 V. Lassee 21 V. Marine Bank 189, 190 V. Rudolf 132; 175, 182, 191 V. Spicer 368 V. State Bank 37, 84, 153, 155, 156, 157, 203, 204, 205, 259, 309, 376, 561 Merchants' Nat. Bank ». Nat. Eagle Bank 343, 454 V. State Nat. Bank See Meb- CHANTs' Bank v. State Bank. Merchants' Nat. Bank of Bangor V. Glendon Co. . 573 Merchants' Nat. Bank of' New York V. Exchange Bank of New Orleans 344, 347, 348, 350 Merchants' Nat. Bank of Toledo V. Cumming 587 Merrick v. Bank of the Metropolis 108, 122 Merrill v. Shaw 498 Metoalf V. Bruin 215 Metropolitan Bank v. Godfrey 9 M'Gill V. Bank of the United States 230 Milburn v. State of Maryland 244 Miller v. Austin 64 V. Farmers' & Mechanics' Bank 421 V. Race 460 V. Receivers of Franklin Bank 50, 301, 463 Mills V. Bank of the United States 398, 436, 449 Minet v. Gibson 254, 255 Minor v. Mechanics' Bank of Alexandria 85, 92, 93, 106, 164, 196, 209, 217, 220, 223, 245, 489, 493 Minturn v. Fisher 262, 265, 441 Missouri River Telegraph Co. v. First Nat. Bank of Sioux City 565 Mitchell ». Cook 159 M'Kenna, Eicp. 48 Mobley ». Clark 388 Mohawk Bank v. Broderick 282, 284, 287, 372, 394 Moise V, Chapman 461 Montgomery County Bank v. Albany City Bank 401,406 V. Bank of the State of New York 406 Moore v. Bushell 39, 538 Moreland v. State Bank 17, 160 Morgan v. Bank of North America 440, 505, 513 V. Bank of State of tfew York 350 Morley v. Culverwell 873 Morrell v. Wootten 803, 318 Morrill v. Brown 460 Morris v. Edwards 460 Morris Canal & Banking Co. v. Van Vorst 217, 245 Morrison v. Bailey 261, 262, 265, 441 Morse v. Hodsdon 232 V. Massachusetts Nat. Bank 157, 164, 206, 259, 285, 289, 308 Morzeman ». Younkin 691 Mosse V. Salt 49, 62, 73, 75 Moule ». Brown 280, 390, 393 Moultrie v. Hoge 136 Mountford v. Harper 323 Moyser v. Whittaker 261 Mt. Sterling Turnpike Co. v. Looney 148 MuUick V. Kadakissen 281, 282 Mumford v. Hawkins 144 Munn V. Bnrch 36, 267, 266, 267, 440, 634 Murray v. Judah 278, 281, 282, 287, 368 V. Pinkett 45 Mussey v. The Eagle Bank 94, 201, 202, 439 N. Nance ». Hemphill 1 National Bank v. Colby 580 V. Commonwealth 588, 693 V. Elliot Bank 29, 225 V. Norton 126 TABLE OP CASES. XIX National Bank of Cliattanooga v. Major 586 National Bank of Chemung v. Elmira 686 National Bank of Commerce v. Merchants' Nat. Bank 388, 396. 423, 429, 431 V. National Mechanics' Bank- ing Assoc. 344, 850, 359, 862 National Bank of Commonwealth w.. Mechanics' Nat. Bank 581 National Bank of Fairhaven v. The Phoenix Warehousing Co. 671, 574 National Bank of Madison v. Davis 564 National Bank of Metropolis v. Orcutt 572 National Bank of Newburg v. Smith 48 National Bank of North America V. Bangs 330, 834, 343 National Gold Bank v. McDonald 379, 389 National Park Bank v. Gunst 671 V. Nintli Nat. Bank 329, 339 National State Bank of Newark v. Boylan 564 National State Bank of Oskaloosa V. Young 585 Neal V. Moultrie 139 Neiffer». BankofKnoxville 87,147 Nelligan v. Citizens' Bank of Louisiana 53, 70 Nelson o. First Nat. Bank 530, 539 Nesmlth v. Washington Bank 440 New England F. & M. Ins. Co. v. Schettler 80 New England Marine Ins. Co. o. Chandler 441 New Hampshire Savings Bank v. Downing 79, 89 New Hope & Delaware Bridge Co. V. Perry 479 V. Phcenix Bank 117 New Orleans Nat. Bank v. Eay- mond 568 New York Bank v. Gibson 525 New York Fireman's Ins. Co. v. Ely 17, 445 Newell V. Nat. Bank of Somerset 562 Niagara Bank v. Bosevelt 461 Niagara County Bank v. Baker 17, 22, 445 Nichols, Exp. 137 Nickerson v. Kimball 591 North River Bank v. Aymar 129 Northampton Bank v. Pepoon 168 Northern Bank ». Farmers' Bank 476 Northern Bank of Kentucky v. Johnson 16 Northern Central R. E. Co. v. Bastian 91 Northrop' u. Sanborn 263 Northwestern Railway Co. v. Whinray 240 Norton v. Seymour 298 Norwich Yarn Co, In re 300 O. Oakley v. Worklngmen's Benevo- lent Soo. 144 O'Brien i\ Smith 280 Ocean Nat. Bank v. Carll 582 O'Connor v. Majoribanks 44 Oddie V. Nat. City Bank 274, 378, 379 Ogdensburg Bank v. Van Rensse- laer 145 O'Hare v. Second Nat. Bank of Titusville 561 Olcott V. Rathbone 198 Oliver Lee & Co.'s Bank, In re 494 Olmsted v. Winsted Bank 479 Olney v. Chadsey 148, 151 Ontario Bank v. Lightbody ■ 460 Opinion of Justices 596 Ordway v. Central Nat. Bank 564 Orr V. Lacy 20 V. Union Bank of Scotland 345 Omn V. Merchant's Nat. Bank 567 Other V. Ireson 292, 323 Overend, Gurney & Co., In re 104 0%'erholt v. Nat. Bank of Mt. Pleasant 565 Overman v. Hoboken City Bank 321, 453 Owen V. Branch Bank at Mobile 486 Pack V. Thomas 281 282 Packard v. Lewiston 696 Palmer v. Lawrence 488, 489 492 V. Yates 110 Pardee v. Fish 64 Parish v. Wheeler 16 Parker v. Gordon 434 V. Merchant 35 Partridge v. Coats 324 Pascoag Bank v. Hunt 198 Patriotic Bank v. Farmers' Bank 398, 436 Patton V. State Bank 476 Patton's Adra'r v. Ash 323 Payne v. Bullard 490, 491, 497 V. Commercial Bank 179 V. Gardner 519 Pearce v. Davis 323 Pearson (Brent's Ex'rs) v. Bank of the Metropolis 397, 398, 399 Pease, Exp. 43 • V. Warren 89 Pedder v. Preston 34, 45 Peel V. Tatlock 247 Peirce v. Butler 398 TABLE OP CASES. Fendergaet v. Bank of Stockton 676 Femigewassett Bank v. Rogers 116, 644 Pendleton v. Bank of Kentucky 176, 187, 226, 229, 243, 244, 246 Peninsular Bank v. Hanmer 166 Pennell v. Deffell 300 Penobscot & Kennebec R. R. Co. V. Dunn 491 Fentz V. Sackett 145 People V. Bank of Niagara 25 V. Bank of Washington and Warren 25 V. Bartow 1 t'. Brewster 2 V. Commissioners 689, 692 V, Commissioners of Taxes and Assessments 589 V. Hudson Bank 24 V. Jenkins 244 V. Oakland County Bank 4 V. State Treasurer 470, 471 ». Throop 112 V. XJtica Ins. Co. 1 V. Washington & Warren Bank 469 People, ex rel. Cagger, v. Dolan 596 People, ex rel. Tradesmen's Nat. Bank, v. Commissioners of Taxes and Assessments 588 People, ex rel. Williams, v. Asses- sors of Albany 688 Percy v. Miliaudon 110, 120 Peterson v. Union Nat. Bank 376, 378, 379 Philadelphia Bank v. Ex'rs of Thos. Officer 547 Philadelphia Loan Co. u. Towner 14,21 Phipps V. Milbury Bank 326, 401 Fickard v. Banks 460 V. Sears 357 Pierce v. Williams 247 Pierson v. Thompson 141 Fine River Bank v. Hodsdon 489 Piscataqua Exchange Bank v. Carter 440 Pittsburg Locomotive & Car Works V. State Nat. Bank 668 Planters' Bank v. Farmers' & Mechanics' Bank 41, 42 V, Lamkin 221 V. Sharp 16, 20 V. State 24 Planters' & Merchants' Bank v. Hili 213 Piatt ». Beach 577 ti. Beebe 578 V. Sauk County Bank 65 Piatt, Receiver, v. Behtley 50 Piatt's Petition 571, 576 Pletts V. Jolinson 264 Plymouth Bank u. Bank of Norfolk 440 Polglass V. Oliver 269, 460 Pollard V. Stockholders of Ken- tucky Exporting Co. 500 Pond V. Underwood 291 Poorman v. Mills 64, 283 Pope V. Bank of Albion 206, 316 Porter v. Bank of Rutland 180 V. Merchants' Bank 166, 168 V. Taylor 299 Portland Bank v. Storer 6 Pott V. Clegg 29, 40, 76 Powell's Trusts, In re 35 Fowles 0. Paige 126 Pratt V. Foote 275 Price «. Neale 327, 328, 341 Frideaux v. Criddle 281, 403 Frosser v. Wagner 291 Protection Ins. Co. ». Harmer 445 Provident Institution for Savings V. City of Boston 695 Pruyn v. Van Allen 511 Furchas v. Mattison 303 Putnam v. Sullivan 863 R. Raborg v. Bank of Columbia 398 Randleson, Kxp. 35 Rankin v. Sherwood 498 Raphael v. Bank of England 474 Rastell V. Draper 252 Reapers' Bank v. Willard 469, 470 Receivers of Bank of Circleville V. Rennick 25 Reciprocity Bank, In re 496, 498 Reddell v. Dobsee 381 Reese v. Bank of Commerce 507, 508 Reeves v. State Bank of Ohio 407, 419, 426 Regina v. Esdaile 188 V. Watts 324 Renner v. Bank of Columbia 397, 398, 436 449 Reynolds v. Chettle ' 457 Rhodes v. Morse 870 Richards v. Kountze 568 V. New Hampshire Ins. Co. 115 Rickford v. Ridge 390, 391, 394 Ridgway v. Farmers' Bank 77, 104, 108, 148, 162, 547 Ridley v. Plymouth Grinding & Baking Co. 119 Rigby, Jixp. 291 Ringo V. Trustees of Real Estate Bank 468 Ritchie v. Bradshaw 280 Robarts v. Tucker 848, 851, 352 Robb V. Ross County Bank 166, 168, 176 Roberts v. Corbin 627, 532, 634 Robinson, Exp. 115 i>. Bank of Attica 275 V. Bank of Darien 24, 474, 479, 480, 498, 508 TABLE OP CASES. XXI Eobinson v. Bealle 128, 124, 462, 498 V. Bland 14 V. Ilawksford 258, 260, 281, 282 V. Lane 481, 496, 501, 503 Eobson V. Bennett 315, 316 V. Oliver ■ 284 Kochester City Banic v. Elwood 212, 220, 221 Roclc River Bank v. Sherwood 19 Rogers v. Huntingdon Bank 507, 508 V. Kelley 209 Rollin V. Steward 520, 622 Rolls ». Pearce 383 Roney, Exp. 117 Root V. Erdelmeyer 586 Rosa V. Brotherson 423 Rosenback v. Salt Springs Nat. Bank 506, 575 Ross V. Bedell 256 Rothschilds v. Corney 283, 285, 370 Rounds V. Smith 275, 311, 534 Row V. Dawson 819 Royal British Bank, lie 137 Ru£Sn B. Board of Commissioners 584, 586 Rufford ». Bishop 74 Russell V. Hankey 429 V. LangstaSe 363 Ryan v. Dunlap 159 Sacketts Harbor Bank v. Presi- dent, &c. Lewis County Bank 6 Saddler i). Belcher 31 SafEord v. WyckofiE 6, 11 Sagory v. Dubois 489, 490 Salem Bank w. Gloucester Bank 80, 89, 94, 98, 101, 119, 190, 195, 357, 482, 483 Salt Springs Nat. Bank v. Burton 434 Salter v. Burt 261, 872, 873 Sandford v. Hays 53, 70 Sargent ». Webster 122 Saunderson v. Jackson 252 V. Piper 326 Savings Bank of Cincinnati v. Benton 144 Sawyers' v. Pawners' Bank 151 Sayer v. Wagstaff 269 Schley v. Dixon 134, 136 Schmidt v. First Nat. Bank of Selma 680 Scholey v. Bamsbottom 277 Scott V. Franklin 42 V. National Bank of Chester Valley 66, 67, 98 V. Ocean Bank 428 V. Porcber 303 Second Nat. Bank i'. Williams 381 Second Nat. Bank of Erie v. Brown 563 Security Bank of New York v. National Bank of the Com- monwealth 579 Security Bank of New York v. National Bank of the Republic 865 Seeley v. New York Exchange Nat. Bank 557 Selfridge v. Northampton Bank 469 Seneca County Bank «. Lamb 20, 21 Serle v. Norton 281, 282 Serrell v. Derbyshire R. R. Co. 283, 294 Seventh Nat. Bank v. Cook 310, 356, bm Sewall V. Boston Water Power Co. 345 V. Lancaster Bank 507, 508, 511 Shaffer v. McKee 351 Sharpe v. Bellis ' 363 Shaw V. Dartnall 58 V. Picton 59 Sheehan v. Davis 103 Shiells V. Blackburn 29, 385 Shinkle v. First Nat. Bank of Rip- ley 857,567 Shirley v. Whitehead 381 Shoemaker v. National Mechanics' Bank 16, 557, 560, 561 Shortbridge's Case 290 Shrieve v. Duckham 368 Shunk V. First Nat. Bank of Gallon 563 V. Miller 233 Simmons v. Aldrich 596 Simonton v. Lanier 21 Simpson v. Pacific Mut. Life Ins. Co. 280, 285, 318 Sims V. Bond 29, 63, 297, 300 Simson v. Ingham 34 Skillman v. Titus 283, 371 Skinner v. Merchants' Bank 80, 102 Slee V. Bloom 502 Small V. Franklin Mining Co. 287, Smedes v. Bank of TJtica 400, 405 Smilie V. Stevens 65 Smith V. Bank of Scotland 238 V. Bank of the State 16, 106 V. Butler 35 V. Chester 828, 341, 854 V. Essex County Bank 885 V. Exchange Bank of Pittsburg 8, 564 V. Hull Glass Co. 92 V. Janes 280 V. Mercer 328, 883 341 V. Miller 280, 282 V. Northampton Bank 178 V. Prattville Manuf. Co. 133 V. Smith 326 349 V. Snow 511 V. Whiting 898 436 Snead V. Williams 34,59 Solomons v. Bank of Englan. Fish, 60 N. Y. 265; Miller v. Austen, 13 How. (U. S.) 218 ; Poorman v. Mills, 85 Cal. 118, and other California cases therein cited. 3 Poorman v. Mills, 36 Cal. 118; Pardee v. Fish, 60 N. Y. 265 ; Miller v. Austen, 13 How. (U. S.) 218. DEPOSITORS AND CUSTOMERS. 65 banking established throughout the country leave little interest attaching to this subject, the chief difficulties in which grow out of the evasions and subterfuges attendant upon " wild-cat " banking. A certificate of deposit may or may not be made negotiable. It may be made payable to A. B., when it is not negotiable. It may be made payable to A. B. or order, when it is negotiable by indorsement. It may be made payable to A. B. or bearer, when it is negotiable by simple delivery. If it be expressed as payable " in currency " or " in current funds " or the like phraseology, it is not negotiable because it is not made payable in money, but in that which at the time of paymeht may or may not be money. A tender in any of the circulating notes of the banks of the State would seem sufficient to satisfy the requirements of an instrument so worded ; and courts will not consider current funds to be necessarily either money or equiva- lent to money. 1 Where the certificate, as is not unfrequently the case, states that the amount is payable " on the return of this certificate," or on its presentment, or other such phrase, this language does not alter the legal effect of the instrument. As a promissory note, naming no place of payment, — for a heading with the name of the bank is not such a naming, — its maker, the bank, is bound to find it out and offer to pay it ; and not till then can a return of it be claimed. Neither is the holder gen- erally deemed to be under any obligation to present it for pay- ment before suit upon it.^ Though where a certificate was given to A., " payable to order of himself on presentation of this certificate properly indorsed," the court regarded this as so far like an ordinary deposit that A. could not sue the bank upon it without a previous demand.^ Ordinarily, the signature of the cashier to the certificate is sufficient. Though it is a contract in strict law, and though statutes often designate the manner in which " contracts " shall 1 Ford V. Mitchell, 15 Wis. 304, and eases cited ; Piatt v. Sauk County Bank, 17 id. 222 ; Lindsey v. McClelland, 18 id. 481. 3 Hunt V. Divine, 37 111. 137 ; Smilie v. Stevens, 89 Vt. 315, affirmed in Bel- lows Falls Bank v. Rutland County Bank, 40 id. 377. 8 Bellows Falls Bank v. Rutland County Bank, 40 id. 377. 6 66 DEPOSITORS AND CUSTOMERS. be signed, yet the phrase thus used in the statutes has, by sheer force of necessity and common sense, been construed by the courts not to apply to those instruments, which by the daily course of business in all banking institutions the cashier alone is wont to execute, and among which the simple receipt and promise to repay, which constitute a certificate of deposit, are to be included.^ Special Deposits. A special deposit, so called, is the placing of something in the charge or custody of the bank, of which specific thing restitution must be made.^ Or the phrase may be applied to the thing deposited. It has generally been considered that taking a special deposit falls within the general scope of the banking business although no express power is conferred by the char- ter of the bank, or by the organic law, so to do. It has been regarded as an incident to the general functions of the insti- tution.^ Banks frequently receive special deposits from their cus- tomers gratuitously, accepting no pay and deriving no benefit from the act, which is done solely for the depositor's accom- modation. Assuming that the bank has authority to enter into such an undertaking, it is at best a naked bailment, and the bank is bound only to keep the property with the same care with which it keeps its own property of the like description. It is responsible only for gross negligence, like any other bailee without reward.* It need keep no further supervision over the officers who have direct charge and control of it than it keeps over the same officers having the same charge and control of its own property of the same kind.^ So if the property be 1 See ante, p. 11 ; also the following oases : Curtis v. Leavitt, 15 N. Y. 9 ; Barnes V. Ontario Bank, 19 N. Y. 162 ; State Bank v. Kain, 1 Breese, 45 ; State Bank V. Lock, 4 Dev. 533. '■i Dawson v. Beal Estate Bank, 5 Pike, 283 ; Story on Bailments, § 88. * Foster v. Essex Bank, 17 Mass. 479 ; Marine Bank of Chicago v. Chandler, 27 111. 525 ; Scott v. National Bank of Chester Valley, 72 Penn. St. 471 ; Lan- caster Bank v. Smith, 12 P. F. Smith, 64 ; Caldwell v. National Mohawk Valley Bank, 64 Barb. 833. See post, page 98, et seq. * Chattahoochee National Bank v. Schley, 58 Ga. 369. 5 First National Bank v. Ocean National Bank, 60 N. Y. 278. DEPOSITORS AND CUSTOMERS. 67 placed in the vaults of the bank, together with its own similar property, and be thence stolen by the officer who has charge of the vaults, the bank is not liable to the depositor.^ Though it may be held liable in such a case, where it is chargeable with knowledge or with reasonable grounds to suspect that the teller was an unfit person to be appointed or retained in his position, but has nevertheless retained him there.^ The fact that for two years he has falsified the books of the bank without being discovered was held, in the cited case, not to be such negligence as to render the bank liable. For the negligence constituting the ground of liability must be such as enters into the cause of the loss ; but the loss here was charge- able to the immediate act of dishonesty of the teller, not to the fact that he had purloined the bank's funds or falsified the bank's books. In England, it has been held that where securities are de- posited by a customer with his banker for safe-keeping, or for the purpose of having the interest thereon collected for him by the banker, the banker is not liable if the securities be stolen, unless the loss has been caused or aided by his gross or con- tributory negligence.^ But the bank was held liable where the teller delivered certain bonds, left as a special deposit, to a per- son calling himself by the same name as the bailor, -but in fact not being the bailor ; on the ground that the teller was guilty of gross negligence in not taking proper care to assure himself as to the identity of the stranger with the bailor.* But if any special arrangement should be entered into by which the bank should be enabled to derive any advantage or profit from the receipt and custody of the deposit, or if it should accept pay for the care of the same, then its duties would at once be changed to those of an ordinary bailee for hire. Then, as in the supposed instance of robbery or embezzlement by one of its own officers, it would be no exoneration from liability to 1 Foster v. Essex Bank, 17 Mass. 479; Scott v. National Bank of Chester Valley, 72 Penn. St. 471 ; but see Leach v. Hale, 31 Iowa, 69. 2 Scott V. National Bank of Chester Valley, 72 Penn. St. 471. 3 Giblin v. M'MuUen, 2 L. E. P. C. 317 ; 38 L. J. P. C. 25. ' Lancaster Bank v. Smith, 12 P. F. Smith, 54. 68 DEPOSITORS AND CUSTOMERS. show that the same care had been taken of this as of the bank's funds, and that the same officer had in the same way plundered the bank itself. The corporation would still be held to make good the bailor's loss. But it is clear that some such direct advantage, operating by way of consideration for the assump- tion of increased responsibility, must accrue to the bank to place it under such an obligation. An express stipulation or acknowledgment, given by the cashier in writing, to the effect that the property has been received by the bank " for safe- keeping," does not make the transaction other than a naked bailment, as above stated.^ The bank is acquitted by a return of the special deposit to any person authorized to receive it, although at the time the bank did not know of the authority. Power, however, to re- ceive dividends and coupons accruing on share-certificates and bonds constituting the deposit is not authority to withdraw the certificates and bonds themselves.^ But the power of the bank to make contracts of bailment of this nature has ,been recently questioned in some cases. Whether the receipt of goods and securities on deposit for safe-keeping is within the implied powers of national banks organized under the act of congress of 1864, c. 106, is a qucere by the New York Court of Appeals. But it is said to be cer- tain that such a function is not ordinarily or necessarily appur- tenant to or a part of the general banking business which such associations are authorized by their organic law to conduct ; that accordingly the cashier has no power to enter into such a contract of bailment with any person on behalf of the bank without some special authority ; that in the absence of proof that the cashier had received such authority from the directors, or that they had ever sanctioned or had knowledge of such contract, or that it was the habit of the bank to enter into such undertakings, or that other national banks were accustomed to receive deposits of like character under like circumstances, it was unquestionable that the authority so to contract did not reside in the cashier, and such a contract, made by him, was 1 Foster v. Essex Bank, 17 Mass. 479. 2 Chattahoochee National Bank v. Schley, 58 Ga. 369. DEPOSITORS AND CUSTOMERS. 69 ultra vires} The bank receiving such an unauthorized bail- ment, being at best a mere gratuitous bailee, is liable only for gross negligence.^ It has been said that, though the act of the cashier in re- ceiving special deposits cannot alone bind the bank, yet if the directors have knowledge of his action in this respect, and do not interfere or object to it, or if it is the established cus- tom of the bank, then the bank will be bound by the cash- ier's receipt of the property.^ But in such case the bank, as a gratuitous bailee, is liable only for gross negligence, and for the lack of that " care which the most inattentive persons take." * In the case of property pledged to the bank as collateral security, the bank is held only to ordinary care.^ Any thing whatever, which the bank may consent to receive in charge, may be the subject of a special deposit. Ordinarily, a deposit of money, at least if it be the current money of the country or State where the deposit is made, will be assumed to be a general deposit, unless the contrary is at the time directly notified, or in some shape distinctly implied, so that the bank could not reasonably misunderstand the depositor's intent. Thus, if a " sealed packet, bag, box, or chest " be deposited, though it contain ordinary current money, yet the manner and condition of the delivery shall suffice to inform the bank that the deposit is designed to be special and not general. Neither does it matter what may be the actual value of the property deposited, or what that value may become during the period of deposit. If bills or notes be deposited which are partially depreciated, and which continue to depreciate even to the point of worthlessness, yet the bank is still bound to restore them 1 First National Bank v. Ocean National Bank, 60 N. Y. 278 ; Wiley v. First National Bank of Brattleboro', 47 Vt. 546 ; Lloyd v. West Branch Bank, 15 Penn. St. 172. But see Turner v. First National Bank of Keokuk, 26 Iowa, 562, which, by implication, would sustain a contrary view, since it seems to recognize a claim for a special deposit as a debt of the bank. 2 First National Bank v. Ocean National Bank, 60 N. Y. 278. 3 First National Bank ». Graham, 79 Penn. St. 106. ' Ibid. ; De Haven v. Kensington National Bank, 81 Penn. St. 95. 5 Jenkins v. National Village Bank, 58 Me. 275 ; Dearborn v. Union National Bank, 88 id. 273, 61 id. 369. 70 DKPOSITORS AND CUSTOMERS. specifically to the depositor, whose rights of ownership are not affected by the value of the property.^ These cases show that it has been thus held, even where the deposit was of " Confeder- ate money," and of the so-called " cotton money," current in the revolted States during our last war. The illegality and wrongfulness attendant upon the original issue, and subsequent using of such money, was not sufficient excuse to exonerate the bank from returning a special deposit of it in specie. But other cases are to a contrary purport upon this precise point.^ After the passage of the Legal Tender Acts, so called, it was held, in Pennsylvania and Louisiana, that a deposit of so much gold coin, for which a certificate of deposit was returned, could yet be repaid in treasury notes.^ It was regarded as a general deposit of money, not as a special deposit of specific coins. And in Wisconsin, it was less justifiably held that a deposit of coin, as collateral for a loan, which is, in fact, at least for the purposes involved in this discussion, a special deposit of that coin, could be discharged by the return of the same nominal amount in the legal-tender treasury notes of the United States.* In Indiana, it was properly held, on the contrary, that where a special deposit of gold coin, partly ot the United States and partly foreign, had been converted by the bailee, the bailor should be allowed to recover the real value of the amount in the treasury notes, as contradistinguished from the nominally equivalent sum.^ In Maryland where gold coin was deposited and an entry " Cash, (coin) $3000," was made in the depositor's bank-book, it was held that, if the depositor could show that this entry imported an agreement to repay the amount in coin, it could only be so repaid, and that an offer of legal-tender notes would not discharge the bank. Nor was the contract to return in 1 Dawson v. Real Estate Bank, 5 Pike, 283 ; Green v. Sizer, 40 Miss. 530. And see Maynard v. Newman, 1 Nev. 271. 2 See contra Nelligan v. Citizens' Bank of Louisiana, 21 La. An. 332 ; Foster v. Bank of New Orleans, id. 338. 8 Sandford v. Hays, 52 Penn. St. 26 ; Gumbel v. Abrams, 20 La. An. 568 ; and see Thompson v. Kiggs, 5 Wall. 663. * Warner v. Sauk County Bank, 20 Wis. 492. 5 Bank of the State v. Burton, 27 Ind. 426. DEPOSITORS AND CUSTOMERS. 71 Specie varied by showing that the depositor had subsequently drawn checks which had been paid in legal-tender notes, it also appearing that he had never, since making the deposit, had a less balance than $3,000, to his credit in the bank.^ But the purport of Thompson v. Riggs,^ seems to be contrary to this. The court there regard the entry of the word " Coin " as a mere memorandum, and decline to admit evidence of an usage of bankers to regard it as constituting a contract to repay in coin. The opinion is unfortunately obscure, but such seems to be its import. These cases do not turn so much upon the point of special deposit as of a coin contract, so called. On principle, it would seem that it would be always proper and legitimate to draw a distinction, for various purposes, be- tween coin of the United States and coin of a foreign country, which has not been adopted into ordinary daily currency among the people of the United States. If a deposit of the former be made, in ordinary times when coin is at par, it must be taken as a general deposit unless otherwise explained. But if a deposit of the latter be made, it should be taken as a special deposit, in the absence of express understanding. For it is not properly a payment. Payment, except by agreement of parties, could not be made in such material. The bank cannot, practically at least, pay it out again to its customers ; it can- not use it for meeting the checks of depositors, not even of the very party depositing it, if it be in fact a general deposit. In short, foreign coin is, in the United States, so far in the nature of a commodity that it cannot pass either to or from a banker as money unless by force of an agreement between the parties, either express or to be implied from their usual course of deal- ing together. So if it should be the case that the present or any future Legal Tender Act should make it sufficient for a bank to return in treasury notes the nominal sum which it has received in gold coin of the United States, it yet would not fol- low that a similar return of the nominal value of foreign coin would be, as a matter of logical necessity, equally legitimate. The coin and the notes of the United States are both currency 1 Chesapeake Bank v. Swain, 29 Md. 483. ■i 6 Wall, 663. 72 DEPOSITORS AND CUSTOMERS. of the United States, and the law simply refuses to recognize any distinction or difiference between them. But the foreign coin is different from both these kinds of currency ; even if it were to be replaced by gold coin of the United States, still its value, in the shape of exchange, would be credited or debited in mak- ing up the judgment. None the less should its value be esti- mated in the usual currency of the country which is legal tender, and is the only money practically in use. Further, it certainly seems to us that both law and justice would sustain the rule that where gold is practically a commodity even when in the shape of coin ; when it has ceased to circulate and to be transferred from man to man as current money, then a deposit in it should no longer be regarded as presumably a deposit of so many dollars, returnable in paper of much less real value, but should be considered prima facie a special deposit, as much as gold dust or jewels in ordinary times. As has been seen, a special deposit does not enter into the general funds of the bank, and form a part of its disposable capital. It is to be kept by itself, and specifically returned. Hence it follows that a bank cannot base any increase of issues or discounts upon such unavailable deposits. They are in no sense at its disposal, and it can in no manner (unless there be a special, extraordinary, and peculiar arrangement) reap any advantage or profit, direct or indirect, from the simple custody of them. They are not part of its moneys. Whence it fol- lows that if the law require the bank to return to the govern- ment officials an annual account of moneys deposited, yet the bank is not bound to return any account of its special de- posits.^ Trover will lie for a depositor to recover his special deposit, in specie ; or, if it has been converted by the bailee, assumpsit will lie to recover its value.^ 1 Foster v. Essex Bank, 17 Maes. 479. ' Ibid. ; Bank of Columbia a. Patterson's Adm'r, 7 Cranch, 299 ; Gteen v. Sizer, 40 Miss. 530. DEPOSITORS AND CUSTOMERS. 73 Interest Accounts. Ordinarily, a general deposit with an incorporated bank in this country does not bear interest. But private bankers usu- ally pay interest on customers' balances, and e eonverso charge interest on their overdrafts. With us, however, it is a proper subject of a special agreement or understanding between the parties. In England it might be judicially noticed and assumed by the courts as the regular course of business. But probably it would not be so with us, where private banking is carried on much less extensively. Such agreements may be entered into also with an incorporated bank, though certainly they would never be assumed in dealings with a corporation or association, however it might be with a firm or an individual in the business. It naturally happens that nearly all the cases which we find on this subject are English.^ They chiefly concern disputes which arise as to when rests may be taken ; and as to what rate of interest shall be allowed in cases not specifically provided for by a distinct agreement. Usage, if it contravenes no law, will govern in such controversies. So when a banker and his cus- tomer are shown to have conducted their banking account for a series of years upon a certain specified system, which is not in itself intrinsically illegal, it will be assumed that that system had been originally agreed upon between them, and the prin- ciples involved in it will be held binding for the solution of any subsequent disagreement.^ But acquiescence in the general system does not go further than to fix the principle upon which the accounts shall be computed ; it does not admit the accuracy of particular items, any of which may be disputed.^ It is necessary, however, that the principle which it is sought thus to establish should be one which is in itself strictly legal. Thus it cannot be questioned that a bank, or banker, equally with any other individual, is subject to the operation of the usury laws, and cannot exact more than the legal rate of inter- 1 Gwyn V. Godby, 4 Taunt. 346 ; Ikin v. Bradley, 5 Price, 536 ; Crosskill v. Bower, 32 Beav. 86. 2 Mosse V. Salt, 32 Beav. 269. 8 Ibid. ; Clancarty v. Latouche, 1 Ball & B. 420. 74 DEPOSITORS AND CUSTOMBES. est, either directly or indirectly. Tiie custom, pursued in dis- counting, of deducting the interest at the beginning of the term of the loan, thereby in fact gaining a very little more than the strict legal rate, is allowed and has been sanctioned by the courts ; this matter is treated under the topic " Discount," p. 17.1 One of the most common methods of circumventing the usury laws is by taking " rests " at very short intervals, and so compounding the interest many times, perhaps, in the course of a single year. That " rests " may be taken at inter- vals of proper length is undoubted ; the only question is, what interval is proper ? In Clancarty v. Latouche, supra, a com- pounding at tri-monthly rests was declared to be usurious and intolerable. In Rufford v. Bishop,* it was said that the decision in Clancarty v. Latouche seemed to throw some doubts on rests at a less interval than one year, but that it must be admitted that shorter rests were legal. No definite rule of law therefore exists on the point. In the United States, accountings in every branch of business are customarily had more promptly and fre- quently than is usual in England, and it is quite probable that tri-monthly rests might be sanctioned, if agreed to by both parties. The nature of the customer's indebtedness to his banker for advances is not affected by the fact that the final footing is cast so as to include interest, which, by rests at proper inter- vals, has been from time to time converted into principal, and has since itself also borne interest. Hence a mortgage, given generally to secure the customer's balance, will secure a balance of which such interest, and interest upon interest, are component parts.^ But where a mortgage is given by the customer to secure a specific balance owing by him on a certain day, and subsequent transactions are had between the parties, in which, as well as in those which had preceded the mortgage, compound interest was uniformly charged, it was nevertheless held that the precise sum secured by the mortgage was thereby at once excepted from the general custom governing the other dealings of the parties, and that interest could not thereafter 1 Maine Bank «. Butte, 9 Mass. 49. 2 5 jjugg. 345, ' BufCord V. Bishop, supra. DEPOSITORS AND CUSTOMBES. 75 be compounded thereon, but must be calculated at simple rates, as in all cases of ordinary mortgage debts.* When a judgment is recovered by the bank against the customer for overdrafts or advances, interest will be allowed at the same rate which the banii itself was paying upon deposits on the same account.^ But where the banker and the customer arrange that all indebtedness of either to the other shall bear interest ,at a certain rate per cent, yet upon the death of the customer, or upon his closing his dealings with the banker, being at the time indebted to him, or upon his insolvency, or upon the death of the banker, or his ceas- ing to carry on business, or becoming bankrupt, the special arrangement at once ceases to operate, and from the date of such occurrence the balance of indebtedness then due from either to the other carries only such simple interest as is car- ried by any other ordinary contract debt.^ In casting interest or making the charge to the drawer, it is clear that the banker must debit the drawer of a check, not from the date of the drawing but from the date of the actual payment of the check.* If the banker accepts the check some time before actually paying it, it has not been decided whether he may debit the drawer from the date of the acceptance or from that of the paying. But it has been said that the accept- ing of a check payable at a day future is equivalent to a loan, by the drawer to the banker, of the amount named, for the interval. Following this principle, it would practically amount to a debiting at the time of payment. For if the debit were made at the time of acceptance, yet the acceptance, creating at once a loan from the depositor to the banker for the interval, would cause interest to run on the same sum, for the same period at the same rate per cent, from the banker to the cus- tomer, and the one amount would exactly offset the other. But since the acceptance only binds the banker, at his own peril, to have funds enough of the depositor to meet it when 1 Mosse V. Salt, 32 Beav. 269. 2 Gwyn V. Godby, 4 Taunt. 346 ; Ikin v. Bradley, 5 Price, 586. 8 Crosskill «. Bower, 32 Beav. 86. * Goodbody v. Foster, cited to this point in Byles on Bills, Sharswood's ed., p. 25. 76 DKP0SIT0R8 AND CUSTOMERS. payment is demanded, and as until such demand he has the full use of such funds, it would seem interest should in reason be calculated to the date when demand may be made. Prom the rule laid down at the opening of this chapter, that the banker is in no sense a trustee, or quasi trustee, for the benefit of his customer, it follows that under an agreement to allow interest, he is under no obligation annually to balance the account and credit the interest, go as to prevent the run- ning of the Statute of Limitations.^ 1 Pott V. Clegg, 16 M. & W. 321 ; Foley v. HiU, 2 H. L. Cas. 40. CHAPTER III. POWERS, DUTIES, AND LIABILITIES OP OFFICERS AND AGENTS. Conduct of the Corporate Business through Agents or OfBcers. The old rule of law was, that a corporation could do no act save by a deed executed under its corporate seal. But this ancient principle has of late years been done away with by the compulsion of the practical necessities of business ; and in our land and our time corporations without number transact their affairs with a very infrequent use of this once indispensable for- mality. In the case of The Bank of Columbia v. Patterson's Administrator,^ the Supreme Court of the United States first absolutely declared that the old rule could no longer be re- garded as law, and the same has been since consistently and frequently held, in cases not only of banks but of various other species of corporations.^ But the practical effect of the old rule is reduced to a low point by the doctrine, that the class of cor- porations which are creatures of a statute, whether general or special, are not within the force of the common-law rule. If the statute provides that the management shall be in the hands of a board, or if it orders or authorizes the election of certain officers for the fulfilment of certain familiar functions, all acts done by such board or by such officers within the scope of their authority are to be regarded as done directly under and in pursuance of a power vested in them by the legislative enactment, and therefore as relieved from those formalities which otherwise the common law might demand. Then, too, the ancient rule simply required that when the corporation 1 7 Cranch, 299. ^ Fleckner v. Bank of United States, 8 Wheat. 338 ; Mechanics' Bank of Alexandria v. Bank of Columbia, 6 id. 326 ; Stamford Bank v. Benedict, 15 Conn. 437 ; Kidgway v. Farmers' Bank, 12 Serg. & R. 256 ; Fishmongers' Com- pany V. Robertson, 12 L. J. N. s. 185; 6 Man. & Gr. 286 ; 6 Scott, N. R. 56. 78 POWERS, DUTIBSj AND LIABILITIES itself performed an act, that act should be done by deed and with the seal. This rule, strictly construed, still leaves the corporation free to create agents to whom it may delegate power to act for it, and the acts of such agents, though bind- ing the corporation, are yet not primarily the acts of the corporation, and so need not be performed by deed nor evi- denced by seal. Such are the two favorite jnethods which jurists have adopted for annulling without breaking an ancient and time-honored principle. Either artifice accomplishes suffi- ciently satisfactorily the desired end. Though to make the former apply it is essential that there should be a statutory enactment, which is not wholly silent concerning the govern- ment or appointment of officers of the corporation; and the latter is available only when the deed and corporate seal appear somewhere in the chain of proceedings. For the cor- poration must act somewhere and at some time in creating the original agency and making the primal delegation, and this act must be accompanied by the common-law formalities, since it cannot receive the protection of the agency theory. But the simple truth is, that the elastic expansion of modern business has irrevocably snapped the clumsy and useless ligament, which older generations found less intolerable. Judges, in evading the rigidity of an antiquated dogma of the law, have simply yielded to that pressure of invincible necessity which the developments in the conduct and systems of the business world are every day bringing to bear upon old-world legal technicali- ties. It would only drag the law into contempt to declare that it requires every check or draft, every loan or discount, every indorsement or transfer, made by a bank, to be evidenced by a corporate deed and seal. The business of an incorporated bank ^ can of course be con- ducted only by agents of the corporation, or, as they are com- monly styled, officers of the bank. It is in the corporate shape 1 The "associations" of New York, organized under the statutes of that State, differ only in some slight and insignificant particulars from ordinary corporations. For all the purposes of the matters now under discussion they may he regarded as corporations. The National Banking Act, sec. 8, especially declares that all organizations under its provisions, though called "associa- tions," shall yet have the legal character of corporations. OP OFFICERS AND AGENTS. 79 that nearly all the banking business in the United States is carried on ; though the English system, by which private indi- viduals and partnerships enter into the banking business, is by no means unknown among us. Even in this latter species of arrangement, however, the individual or partnership, if the business be tolerably large, must appoint clerks or agents, who must perform the functions, and may often assume the titles, of certain of the bank officers, — not. of president or directors, of course, but of cashier, teller, book-keeper, and the like. In either case, the official or clerk is in fact strictly the agent of the corporation, partnership, or individual ; and in general terms it may be stated that the ordinary rules of the law of agency will apply for the settlement of all appropriate ques- tions. These rules will govern all transactions in which the corporation or its official are parties, just as much as they govern all transactions in which the individual and his clerk are parties. It makes no difference that the principal is a corporate body and that the agent has an official designation. His title serves only to show in what class of dealings, for what purposes, and with what powers he is accredited as an agent ; and the simple legal relationship of principal and agent, as it is well understood in its constant occurrence between individuals, is to be found with precisely the same legal attributes beneath the corporate impersonality and the official dignity.^ So all acts done by an agent, with the essential proviso that they be done officially,^ and that they fall within the scope of his powers and duties,^ are in law the acts of the corporation itself. Whether these be rightful or wrongful, innocent third parties have the right to regard them in this light, and the law will thus construe them. In like manner, knowledge obtained by the agent in his official capacity, and within the scope of his agency, will affect the corporation ; and declarations made by him in the like manner and within the like range will bind the 1 Frankfort Bank o. Johnson, 24 Me. 490; Atlantic Bank o. Merchants' Bank, 10 Gray, 532. 2 Hughes V. Bank of Somerset, 5 Litt. 45. 8 New Hampshire Sav. Bank v. Downing, 16 N. H. 187. 80 POWERS, DUTIES, AND LIABILITIES corporation. But acts ' done, knowledge obtained, or 'declara- tions made, beyond such scope, or not in an ofiBcial capacity, do not affect the company at all.^ Where a bank officer, for the purpose of concealing a defi- ciency in the assets of the bank caused by his own crime or default, procures fraudulently the money of another person and mingles it with the funds of the bank, thereby making those funds appear to be full and sufficient, the title to the money thus obtained does not pass to the bank ; but the money may be recovered back in a suit brought against the bank by the person who really owns it and has been defrauded of it, though the fraud was not practised on him directly by the bank officer, but by some person in collusion with the bank officer. The knowledge of the officer is the knowledge of the bank and affects the bank. Neither does the rule that, if a person pays his indebtedness with money fraudulently ob- tained, it is nevertheless a good payment and may be retained by the creditor, apply in such a case ; for the bank officer does not pay a debt to the bank, which he owes to it, by means of this money, but simply mingles the money with the funds of the bank as if it were the property of the bank. Nor, for the same reason, can the bank acquire title as hona fide payee on the ground that some other officer of the bank has in good faith handled and counted the money, and generally treated it as assets and property of the bank.^ Any person who deals innocently with the agent or officer of a corporation within the scope of that agent's or officer's functions will be fully protected, and will have his contract enforced by the law. This rule accords so perfectly with both law and justice that it has never been directly assaulted, save 1 Bank of Columbia v. Patterson's Adm'r, 7 Cranch, 299 ; Fleckner v. Bank of United States, 8 Wheat. 338 ; Atlantic Bank v. Merchants' Bank, 10 Gray, 532 ; Fulton Bank v. N. Y. & Sharon Canal Co., 4 Paige, 127 ; Boom ». City of TJtica, 2 Barb. 104 ; New England F. & M. Ins. Co. v. Scliettler, 88 111. 166 ; Wright V. Georgia R.R. & Banking Co., 34 Geo. 330 ; Hartford Bank v. Hart, 3 Day, 493 ; Wyman v. Hallowell & Augusta Bank, 14 Mass. 62 ; Salem Bank V. Gloucester Bank, 17 id. 1; Madison & Indianapolis R.R. Co. v. Norwich Savings Soc, 24 Ind. 457. 2 Atlantic Bank o. Merchants' Bank, 10 Gray, 532; Skinner o. Merchants' Bank, 4 Allen, 290. OF OFFICERS AND AGENTS. 81 in one class of cases. These are where the agent, acting indeed within the general and ordinary scope of the agency, is yet in fact contravening some express order, or exceeding some special limitation of authority, imposed upon him in derogation of his natural and usual power. When sucli cases have arisen, corporations have sometimes sought to avoid responsibility by insisting that since their agent had exceeded his powers he had not bound his principal. In such cases the simple question is, whether or not the third party dealing with the agent had a right to suppose that the agent was deal- ing within the scope of his authority. If the ordinary func- tions of an agent are well known, a secret limitation of those functions will not be allowed to operate to invalidate his act done in excess of the secret limitation but within the ordinary scope. The secret limitation can take effect only when notice of it is directly brought home to the third party. Any other rule would open wide the door to endless deceit and false dealing.^ As a general principle, this is sufficiently clear and well established. But in the case of banking corporations it is liable to confusion from the uncertainty attendant upon the knowledge which any individual has of the real limits of the powers and duties of any particular officer. If a statute de- fined accurately the acts which each officer should be com- petent to perform this difficulty would be decreased. But in the absence of such enactments every board of directors may assume, and very many in fact do assume, to define the func- tions of the respective officers according to its own notions of propriety in such matters. Or it may be that the board will conceive it preferable to attempt no such definition, but simply to appoint one person to be " cashier," another to be " receiving teller," another to be " paying teller," and so on through the various offices. Now in either of these cases it is natural, indeed it is necessary, that a third person should suppose that these various officers are empowered to perform the duties which the ordinary usage and method in the trans- 1 Mayall v. Boston & Maine R.B. Co., 19 N, H. 122 ; Farmers' & Mechanics' Bank v. Champlain Transportation Co., 23 Vt. 186; Clarke National Bank u. Bank of Albion, 52 Barb. 592. 6 82 POWERS, DUTIES, AND LIABILITIES action of banking business leaves in the hands of such oflBcers. Upon this supposition it is practically necessary that the public should act in dealings with the bank. Certainly the supposi- tion is sufficiently vague. The basis of usage on which it rests is little more stable than a quicksand. It is not uniform in different cities, often not in different institutions in the same city, and perhaps is not permanent in the same cities or in- stitutions throughout a long course of years. Still a small nucleus of certainty has grown by degrees into existence amid the great uncertainty. The word " cashier " means something ; the word " teller " means something. This is shown very conclusively by the frequency with which directorial boards content themselves with simply installing a person in one or other of these offices, without any effort to name the appurte- nant duties, but assuming by unavoidable implication that of course there is a certain well-known range of powers and duties as naturally' and necessarily constituting the office, and as publicly known and understood to do so, as if they should be embodied in a written vote. Courts have many times recognized the same fact, and have decided that presi- dent, directors, cashier, and teller have or have not either exclusive or concurrent powers to do acts of the nature desig- nated in the particular case. For example, the power to dis- count is exclusive in directors, as such. The power to draw checks is in the cashier by virtue of his office. The president, qud president, is empowered to defend suits and engage counsel on behalf of the bank. There are then certain classes of acts which the law recognizes as properly to be performed by certain officers. These classes may be enlarged by future decisions. The only absolute limit yet established is when judicial dicta have declared some special power not to be inherent in some special officer. Starting then from this position, that there are certain powers, only a portion of which are yet known by the certain knowledge which grows out of a judicial ruling, which belong to and constitute a certain office, it is clearly reasonable and just that the public, and any individual mem- ber thereof, dealing with a person notoriously filling such an office, should have the right to presume, in the absence of OP OFFICERS AND AGENTS. 83 express notification to the contrary, that such person has such powers. It may be that a board of directors could by vote declare that their cashier should not have power to draw a check. But if they still allow him to fill the office of cashier, as to all third parties dealing with him in ignorance of this unusual limitation, he must still be allowed to bind the bank by the exercise of this customarily inherent authority. That he has exceeded the scope of his agency may be urged by the bank against him personally, and may be an abstract truth, but it is one which public policy will never allow the bank to set up against the claim of a third party who dealt in igno- rance of this peculiar and extraordinary limitation. If there- fore the corporation, or any authority within and on behalf of the corporation, undertake to set strange limits to the powers which it will allow to be exercised by its officers, it must either refrain from giving to these officers the titles usually regarded as indicative of such powers, and for that reason equivalent to a general holding out of them to the world as possessing such powers, or they must bring home to persons dealing with them a knowledge of the limitations they have seen fit to draw around the offices. Otherwise the corporation will be bound by acts of their president within the scope of the ordinary and legally inherent duties and powers of a president ; by acts of their cashier within the scope of the ordinary and legally inherent duties and powers of a cashier ; and so on, through the whole range of offices. Obviously the namefe and titles by which the various agents are denominated* are intended to designate, and must be pre- sumed to designate, the nature and scope of their respective agencies. If a banking corporation gives to an individual a title which in ordinary banking parlance is attached to a cer- tain range of powers and duties, it cannot afterwards be heard to say tliat the secret instructions of the corporate government or the peculiar by-laws adopted by it have deprived the officer of these powers and duties, or any of them. One dealing with the officer of a bank within the ordinary and legal scope of such an officer's authority, is entitled in justice and at law to assume as against the bank that the officer is invested with this cus- tomary authority. 84 POWERS, DUTIES, AND LIABILITIES Neither does it make any difference in this respect that the charter, or the statute under which the corporation exists, gives to the board of directors power to settle the respective func- tions of the subordinate officers. Our National Banking Act ^ empowers the directors to " appoint a president, vice-president, cashier, and other officers, define their duties" &c., also " to define and regulate by by-laws . . . the manner in which . . . its officers [shall be] appointed, its property transferred, its general business conducted, and all the privileges granted by this act to associations organized under it shall be exercised and enjoyed." Occasionally, in other enactments, the expres- sion " to diefine and limit " duties has been used. But, after all, these phrases probably give to the directors no power over their officers which they would not be allowed to exercise by virtue of their common-law authority. ^ The directors are the government of the bank, and must have power to direct and control the acts and doings of the other and subordinate agents. But whether at common law or under such statutory enactments they seek to curtail the ordinary powers of any of their officers, their action in so doing can only be valid as be- tween the officer and the bank. If the officer does what they have expressly forbidden him to do, though it be an act ordi- narily within the range of his functions, he will be liable only to the corporation for the results of his disobedience. The directors unquestionably have the power, as against him, to "define "his duties generally, or to "regulate" or "limit" them upon any particular occasion, and in any particular mat- ter. They may also have the same power *as towards any individuals among the public, or even as towards the entire public. But it is an absolutely indispensable preliminary 'to the exercise of the power in this direction that the individuals or the public should receive actual notice of the fact. The judicial authorities seem fully to sustain the propounded doctrine. The matter is one of sufficient importance to justify the quotation of the more conclusive passages. The New York Court of Appeals says : " The whole tenor of authority is 1 Stat. 186S-4, chap. 106, § 8. ^ Merchants' Bank v. State Bank, 10 Wall. 604. OP OFFICERS AND AGENTS. 85 in favor of holding corporations for the acts of their officers, especially executive officers and general agents, within the general scope and apparent sphere of their duties, and not holding them for acts done without special authority in cases without such scope and general sphere of duty. The cases are all reconcilable and sustainable on this principle, and no other. Courts and judges have spoken cautiously on the sub- ject, but the language has been uniform, limiting the responsi- bility of corporations for the acts of their officers and agents, in the absence of an express authority to do the particular act, to those performed in the discharge of their ordinary duties in the usual course of business, and within the sphere and scope of such duties. Such are presumed to be by authority of, and within the knowledge of, the directors ; and within the rule are included such acts as are shown to have been performed with the knowledge and implied consent of the directors, although out of the line of ordinary duty and usual course of business. ... It must be assumed, therefore, and the public and those dealing or having business transactions with the bank, had the right to assume, that they [the officers of the bank] had and exercised the powers and performed the duties usually devolved upon and performed by persons occupying the same position in other banks, and such as they were in the habit of performing in the transaction of the current and ordi- nary business of the bank ; and within this limit the corpora- tion would be bound by their acts in the absence of proof that their powers were limited or restricted, and that such restric- tion and limitation was known to the persons dealing with them. Whatever may be the extraordinary or incidental powers of the corporation under its charter, power to bind the corporation can only be presumed to exist in its executive agents and officers within the scope of its ordinary business ' and their ordinary duties." ^ In Minor v. Mechanics' Bank of Alexandria,^ the court say, " Officers of a bank, as of any other corporation, are held out to the public as having author- ity to act according to the general usage, practice, and course 1 First National Bank v. Ocean National Bank, 60 N. Y. 278. 2 1 Pet. 46. 86 POWERS, DUTIES, AND LIABILITIES of their business. Their acts within the scope of such author- ity will generally bind the bank in favor of third persons pos- sessing no other knowledge." In The Bank of Vergennes v. Warren,! discussing the legality of an act, which the court held to fall within the scope of the cashier's power, qud " cashier," the judge said, " ludeed, I think, it would not defeat the purchase if it could be shown that the cashier had been forbidden by the principals to transact such business." In Commercial Bank of Buffalo v. Kortright,^ the court applies to banks and their officers the general rule of agency, as laid down in Story on Agency, §§ 127, 133, that the principal is bound by acts which he holds out his agent as competent to perform, despite that they may contravene secret instructions or orders. Unquestionably any person invested with the famil- iar title of an official position in a bank is held out to the public as competent to perform all the usual and inherent or essential functions of the office. In Wild v. Bank of Passama- quoddy,^ it was said, that any bank choosing to restrict the ordinary scope of its cashier's authority is at perfect liberty to do so ; but that, in such case, it is incumbent on the bank to show, not only the fact that it has imposed a certain restric- tion, but, further, that the imposition of this restriction, being of a peculiar and unwonted kind, is known to those with whom it is in the habit of doing business. The language in this case would seem to indicate, what is doubtless the correct rule, that actual knowledge must be brought home to the party sought to be charged with it, and that constructive notice would be regarded as insufficient. The onus of giving full and complete informa- tion is fairly undertaken by a bank which enters upon an eccentric course of dealing. In Franklin Bank v. Steward,* it was said that the cashier's " true position appears to be that of a general agent for the performance of his official and accustomed duties. While acting within the scope of this ' authority, he would bind the bank, although he might violate his private instructions." Tiie case of Lloyd v. West Branch Bank ^ is perhaps even stronger than any of the others. For 1 7 Hill, 91. 2 22 Wend. 348. 8 3 Mason, 505. « 37 Me. 519. s 15 Penn. St. 172. OP OFFICERS AND AGENTS. 87 though the judge in that cause is considering not the case of a circumscribing vote of a directorial board, but the actual cliar- ter of the bank itself, he does not hesitate to apply the same principle. The decision is rather striking by reason of the vigor and oddity of its expression, but it is certainly sound. It is, briefly, to the effect that recognized and known function- aries, especially the officers of a bank, are held out to the world as having authority to act according to the general usage, practice, and custom of the business in such institu- tions. Otherwise there could be no safety for the public in doing business with them. Their charters differ in some re- spects, and individuals cannot be presumed to " carry these documents in their pockets as a vade inecum." The acts of officers therefore, in the scope of such general usage, practice, and course of business, bind the corporation in favor of third persons who did not know at the time that the officer was ex- ceeding the course of his authority. In the Commercial Mutual Marine Ins. Co. v. Union Mutual Ins. Co.,^ which, though not a bank case, yet covers the point now in discussion with great thoroughness and accuracy, — a contract made by the presi- dent in contravention of secret limitations was upheld. The court declared that, in order to show that the corporation held out their officer as competent to make such a contract, it was sufficient evidence to show an usage among such companies to make such contracts through such officer. In Neiffer v. Bank of Knoxville,^ a contract, made not in accordance with the pro- visions of the charter, was nevertheless upheld on the ground that customarily such a contract could have been made by the officer who had in this cas^ irregularly undertaken to make it ; and that therefore it should be enforced in favor of the third party who had entered into it in good faith, and in ignorance of the charter restriction. The cases, it will be observed, relate especially to the acts of cashiers ; a circumstance fully explained by the fact that the cashier is the chief executive officer, and that naturally his acts are more often the subject of controversy than those of other officials. But the general principle which runs through I 19 How. 318. 2 1 Head, 162. 88 POWERS, DUTIES, AND LIABILITIES the decisions is equally applicable to a president, teller, or other agent whomsoever. None of the above cases deny or infringe the statutory right of defining, restricting, or limiting official powers. On the contrary, nearly all of them in terms distinctly recognize the power of the directorial board, or the government of the cor- poration, to prescribe, either with the effect of enlargement or circumscription, the functions of any officer. They only super- add to this right (making no distinction, as we have above pointed out, whether it owes its existence to common-law, charter, or general statute), the duty of bringing home knowl- edge of their action to the individual dealing with the officer, whenever in the absence of such knowledge he would naturally be deceived and injured by relying simply upon the usual course and usage of banking business. Since the power to define and limit does exist, it must be supposed to have some value, and the language of the statute must be allowed to ^describe some substantial privilege. The power is indeed valuable and the privilege substantial, and no definite limit can be set to either, provided only, that the one requisition is complied with of giving due and sufficient notice of its exercise in any instance. It must then necessarily affect and bind the party notified. Two English .cases well illustrate this rule. A cashier in- dorsed negotiable paper, which ordinarily he would have been empowered to do by the inherent authority of his office. But he preceded this indorsement by the words " per proc." He was in fact acting under a peculiar and special authority, dis- tinct from that ordinarily vested in him by his office ; and these words were intended to notify ,the dealer of this circum- stance, and were words customarily having this warning or admonitory significance. The court held that the notice that the authority was special and peculiar, and therefore wholly distinct from that appurtenant to the cashier as such, was suf- ficient.i In fact the cashier, tliough doing an ordinary act, was not doing it under his general official authority, but under an independent and unwonted delegation of power. The words 1 Alexander i-. Mackenzie, 6 C. B. 766 ; Stagg v. Elliott, 12 C. B. sr. s. 373 ; 8. 0. 31 L. J. C. P. 260. OP 0PPICEB8 AND AGENTS. 89 prefixed were, by their well-known meaning, equivalent to a direct statement to this effect to the dealer, who was then and thereby put upon his inquiry if he wished to ascertain precisely the nature and extent of the special authority. If he did not care to be at the pains of satisfying himself on this point, but relied on his opinion of the cashier's character, or simply yielded to indolence or carelessness, any resulting loss must properly fall wholly on him. He had received a full and suf- ficient warning that the cashier was not in this matter author- ized to deal with him by virtue and in the exercise of his customary official authority, and he could not afterward be allowed to appeal to that customary official authority to sup- port the regularity and validity of an act which he was dis- tinctly notified at the time was not done under it. If an officer is acting, speaking, or receiving information in matters which the ordinary usage of the banking business casts within the range of his functions, the bank is bound and affected thereby, as any other principal, by the act, declaration, or knowledge of the agent.^ No corporate vote is necessary to give validity to a contract made by an agent in a matter con- cerning which he has, from any source, the power to contract.^ But no officer can bind or affect the bank by any dealing in the department allotted to another officer. The bank, in appoint- ing various officers, is simply creating various perfectly distinct and independent agencies. Bach agent can act only in his own agency. In like manner, demand or notice can affect the bank only if it be made upon or given to the officer having charge of the subject-matter which the notice concerns. If it be given to one within whose sphere the business in question does not fall, the bank is not chargeable with it ; neither answerable for negligence if it fails to act upon it.^ For example, the book- keeper of a bank has nothing to do with its litigation, and 1 Wyman v. Hallowell & Augusta Bank, 14 Mass. 58 ; Salem Bank ». Glou- cester Bank, 17 id. 1 ; Hartford Bank w. Hart, 3 Day, 491 ; Hooker v. Eagle Bank, 30 N. Y. 83 ; New Hampshire Savings Bank v. Downing, 16 N. H. 187. 2 Eastman n. Coos Bank, 1 N. H. 23; Lime Rook Bank v. Maoomber, 29 Me. 564. ' Goodloe V. Godley, 13 S. & M. 233 ; Commercial Bank of Manchester v. Bonner, id. 649. 90 POWERS, DUTIES, AND LIABILITIES notices in a lawsuit served upon him would not ordinarily be valid as notices served upon the corporation. So it has been held, that knowledge on the part of a clerk in a bank of the residence of an indorser on a note would not prevent the holder of the note from asserting and availing himself of the igno- rance of this fact on the part of those ofl&cers of the bank having charge of this department. Their ignorance was the ignorance of the corporation ; but the knowledge of the clerk was not the knowledge of the corporation. ^ Upon the same principle it has also been held that to make a subscriber's payment of his subscription money for capital stock a sufficient payment and binding upon the bank, it must have been made to an officer authorized to receive it.^ So where the bank has a receiving-teller, whose proper province it is to receive deposits, the bank is not liable to reimburse a de- positor who has handed in his funds to the book-keeper, if it happens that, after their receipt by that improper and unau- thorized officer they are lost or embezzled before they come to the hands and possession of some one whose special function it is to receive or to keep them.^ On the other hand, the bank has been held liable to reimburse in a case where its manager had succeeded in obtaining and misappropriating the money of a customer, inasmuch as in the conduct of the transaction the officer had done no act which was not strictly within the scope of his legal functions, and had induced the customer to believe that he was acting simply in the regular and ordinary course of the business of the banking-house.* We see, therefore, that no act binds the bank unless done by the officer actually em- powered, or whom the customer .has a right to believe empow- ered, to do it ; and that every act done by an officer within this scope will bind the bank. The rule will hold good even though the act is in fact fraudulent, provided the customer has no 1 Goodloe V. Godley, 13 S. & M. 233. 2 State V. Commercial Bank, 6 Sm. & M. 218. '■> Manhattan Co. v. Lydife, 4 Johns. 877 ; Thatcher v. Bank of State of New York, 5 Sandf. 121 ; though a later case seems, in spite of tlie effort of the court to draw a distinction, to establish a contrary rule : East River National Bank w. Gove, 57 N. Y. 697. * Thompson v. Bell, 26 Eng. L, & Eq. 536. OF OFFICERS AND AGENTS. 91 knowledge of the fraud, but is himself dealing bona fide, and believes the official to be dealing in the like good faith iu the business of his principals. From the preceding paragraphs it is obvious that one suf- ficient method of holding out an agent to the public as com- petent to act on behalf of the corporation in certain matters, is simply to invest him with the title of the officer customarily authorized to act in those matters for banking institutions according to the ordinary course of the banking business. Another and a very simple and unquestionable method of holding out, is by allowing an officer repeatedly to perform any specific act, and recognizing his performance as proper and valid. Long usage implies authority equally with an express resolution. 1 It has been said that a corporation is not bound by an act of its agent simply because it has been his previous practice to do similar acts, unless knowledge of this previous practice is brought home to the corporate govern ment.^ As a broad statement in technical terms of a legal doctrine, this is unobjectionable enough. But it should be understood that the knowledge may be such as arises or is implied by imperative implication of law, as well as knowledge which exists in fact. The directorial board of a bank, which is its corporate govern- ment, and which for all legal considerations is in fact the cor- poration itself, is obliged to meet frequently, and to keep a close and constant supervision over the daily course and con- duct of its business. In many species of corporations the position of director is almost a sinecure ; the board consti- tutes only a sort of advisory body, which may meet only on comparatively infrequent occasions, to discuss large and impor- tant questions concerning the general business policy of the corporation. But it is not thus with banks. Their directors are bound to constant activity and thorough acquaintance with the daily course of the affairs and dealings of the institution. » Hoyt V. Thompson, 1 Selden, 320; Elwell «. Dodge, 33 Barb. 336; Lloyd v. West Branch Bank, 15 Penn. St. 172; Lohman u. N. Y. & Erie R.R. Co., 2 Sandf. 39; Northern Central Bailway Co. . Scott, id. 107. * Commercial Bank v. Bonner, ,18 Sm. & M. 649. OP OFFICERS AND AGENTS. 143 President. — Of bis Powers and Duties Generally. The president of the bank is usually, perhaps universally, a member of the board of directors, and is customarily chosen by the board from their own number. Sections 8 and 9 of our National Banking Act prescribe this method for all banks organized under it. It is the duty of the president to preside at meetings of the board of directors. The amount and nature of the duties imposed upon him may vary in different associa- tions according to the usages or the by-laws of each. But ordinarily the position is one of dignity and of an indefinite general responsibility rather than of any accurately known power. The president is usually expected to exercise a more constant, immediate, and personal supervision over the daily affairs of the bank than is required from any other director. Usage or directorial votes may confer upon him special func- tions, and may extend his authority to correspond with the increase of active duties. But the authority inherent in the office itself is very small ; indeed it is very difficult to say precisely how or wherein it is really much in excess of that which can be exercised by any other single director. Practi- cally this legal principle is not known or not distinctly recog- nized in very many banks, and frequently presidents undertake to exercise a very considerable control in the daily routine of business. When this is done with the knowledge and appro- bation, or the tacit sanction of the board of directors, it may be regarded as legalized by the principles of ratification or usage. Yet these afford an indefinite and dangerous basis on which to rest important dealings. A careful collation of all the adjudicated cases, it must be confessed, wears a striking and peculiar aspect, which is not very favorable to the assump- tion of any species of executive power by a bank president without direct authorization. With scarcely an exception all the decisions are to the effect that the president had no right to perform some particular act, which he had undertaken probably in perfectly good faith to perform, and which had been called in question, and had given rise to the litigation in 144 POWERS, DUTIES, AND LIABILITIES which it was condemned. So the reader will notice that in discussing this topic we are obliged, in order to keep within the bounds of established law, to confine ourselves almost wholly to declaring what a president can not do. Indeed it is a singular fact that the entire collection of judicial authorities justifies the enunciation of only one act as falling within the properly inherent power of the president. This solitary function is to take charge of the litigation of the bank. There is no question but that this matter belongs to him by virtue of his office. He may institute and carry on legal proceedings to collect demands or claims of the bank. He may appear, answer, and defend in suits against the bank. He may retain and employ counsel on behalf of the bank. Counsel requested by him to act for the bank will bind it by their action in the case, within the ordinary powers of counsel, by sole authority of their engagement by him. Nor will it make any difference, though circumstances render that engagement originally wrong or improper.^ This would be his own breach of trust towards the bank, committed within the scope of his authority, damages for which the bank could only recover from himself, and which could affect no innocent outside parties, whether these should be the counsel employed or the other litigants in the cause. Where one transacts business or enters into contracts or agreements with the president of the bank, which in form run between the person upon the one part, and the president, de- scribed as such, upon the other, if it was understood by the party at the time that he was in fact dealing or agreeing with the bank, if he acted upon this supposition in good faith, if the president had from any source authority to bind the bank in such a transaction, and especially if the bank actually receives whatever benefit may accrue from it, — then there can be no doubt that the bank could be held to perform whatever was under- 1 Savings Bank of Cincinnati v. Benton, 2 Mete. (Ky.) 240; American Ins. Co. 0. Oakley, 9 Paige, 496 ; Mumford v. Hawkins, 5 Den. 355 ; Oakley v. Work- ingmen's Benevolent Society, 2 Hilt. 487 ; Alexandria Canal Co. v. Swann, 6 How. 83. OF OFFICERS AND AGENTS. 145 taken on its behalf by its president.' But if the president was acting beyond the scope of any authority derived from his 'office, or from directorial votes or from usage, then his act, ex- cept of course by virtue of a subsequent ratification, could not bind the bank. Even where the president does not designate himself as such, yet the circumstances of the transaction may be put in evidence, to show, so far as they may be able, that he was in fact acting in his official capacity ; and, if this be estab- lished, the failure to designate himself formally by his official title will not affect the binding force of the transaction upon the bank. But if the dealing was with him as an individual, not as an officer, the bank has nothing to do with the affair. Thus where one gave money to a bank president, who signed a receipt for it " to be deposited in the bank to the credit of A." and signed the receipt simply with his name alone, it was held that the facts were admissible to go to the jury for what they might be worth as tending to show that the money was paid to and received by the president in his official capacity on behalf of the bank ; but that they were by no means con- clusive of this, and that if the jury should find that the money was intrusted to the president as a private individual simply for the convenience of getting him to deposit it on behalf of A., then he was A.'s agent, and if he failed to make the deposit regularly and honestly, it was his individual, not his official, default, and the bank was not liable.^ Precisely to the same effect was the decision in Terrell v. Branch Bank.^ Though the officer receiving the money was in this case a director, the principle of law is identical in the two rulings. In New York, special statutes have allowed many matters to be conducted in the president's name. Thus the bank may sue and be sued in the name of its president, provided the cause of action is distinctly laid to be for or against the cor- poration, and not for or against him.* Mortgages to secure 1 Tremont Bank v. Paine, 28 Vt. 24. 2 Sterling v. Marietta & Susquehanna Trading Co., 11 Serg. & E. 179. 8 12 Ala. 502. * Delafield v. Kinney, 24 Wend. 345: Ogdensburgh Bank «. Van Rensselaer, 6 Hill, 240 ; Pentz v. Sackett, Hill & D. 113. See also Hunt v. Van Alstyne, 25 Wend. 605. 10 146 POWERS, DUTIES, AND LIABILITIES subscriptions for stock properly run to him. And it has been accordingly held that the assignment of such mortgages should be executed by him, personally, in his own name, with the addition of his official designation, and under his private seal, rather than under the corporate seal.^ A transfer made to " D. L., President of the American Exchange Bank," was con- strued to be, by fair interpretation, a transfer directly to the bank ; ^ with the same effect of vesting title as if it had been made to the bank itself by its corporate name. In support of this case the statutes of the State were referred to. But the reference seems needless, for the decision could well have rested solely upon the general principles enunciated. These perhaps afford some support to the doctrine advanced in the last preceding paragraph, and certainly make the cited case useful as a general precedent, without regard to the effect of local legislation. President's Control over Property of the Bank. The control of the president of a bank over its property of any description whatsoever, from real estate down to a naked right to bring an action at law, is of the slightest. He has no power to draw checks in its behalf, or against its funds. He is not the executive officer who has charge of its moneyed opera- tions. It is not among his functions to withdraw or remove its deposited funds, or to use them for any purpose whatso- ever. He cannot even employ any portion of the assets or credits of the bank for paying or settling with its creditors, unless by virtue of an express delegation of authority from the directors. He has no more power of management or disposal over the property of the corporation than any other single member of the board. ^ These remarks, of course, refer to his inherent powers enjoyed virtute officii; for of course if any resolution or any established usage gives him the power, either at all times or under special circumstances, to draw against the corporate deposits, he may do so within the limits of the 1 Valk V. Crandall, 1 Sandf. Ch. 179. 2 Leavitt v. Fisher, 4 Duer, 1. ' Gibson v. Goldthwaite, 7 Ala. 281. OF OFFICERS AND AGENTS. 147 power. Thus in the Tennessee case cited, an usage was shown for the president to draw checks when the cashier was absent, and the judges went the length of holding that he might legally do so in the absence of the regular cashier, even though a cashier pro tern, had been chosen.^ When the general management of the affairs of the bank is left, as is customary, with the directors, the president has not power to mortgage, assign, or pledge any more than he has to dispose otherwise of any of its property of any description whatsoever, or for any purpose, however proper and justifiable in itself.^ In the case in Selden's Reports the court say : " In Massachusetts it has been held that neither the president nor the cashier has power virtute officii, to transfer negotiable funds, without express authority from the directors. This, however, must be erroneous, if the transfer be made in the usual course of business, and bona fide. But it is safe to say that when the sale, assignment, or transfer requires the use of the corporate seal, it cannot be made without the assent and authority of the board." However reluctant we may be to confess that the learned judge correctly interpreted the opinion of the Massa- chusetts court, it cannot be denied that his amendment thereof and the doctrine laid down by him are correct. But this is by no means necessarily to be construed as extending the power of the president to the performance of any of the acts speci- fied. The judge says only that the president or cashier must be able to do them, and certainly the cashier is able to do them. Equally certain it is that there is no authority whatsoever for supposing that the intention was to declare the president also able to do them. The same species of limitation upon the power of the presi- dent forbids him to surrender or release claims of the bank against any person, from whatsoever source arising ; or to stay the collection of an execution against the estate of a judg- ment debtor. For either of these acts is the exercise of a 1 Neiffer v. Bank of Knoxville, 1 Head, 162 ; Fulton Bank v. 'Sevi York & Sharon Canal Co., 4 Paige, 127. But as to when the bank is justified In paying on the signature of the president, see chapter on Checks. 2 Hoyt V. Thompson, 1 Seld. 320 ; Leggett ». New Jersey Manufacturing and Banking Co., Saxt. Ch. 542. 148 POWEES, DUTIES, AND LIABILITIES discretionary authority over the affairs and property of the bank which is the peculiar and exclusive province of all the directors.^ The president, unless specially empowered, cannot enter into contracts or agreements on behalf of the corporation. Author- ity so to do may however be conferred on him by the charter, by vote of the board of directors, or by the existence of such facts as constitute a public holding out, and warrant the public in believing that the undertaking is within the scope of his legitimate delegated authority .^ But a charter provision, or a directorial vote conferring a power upon the " president and directors," or the " president and cashier " will be strictly con- strued as conferring only a joint power, exclusively, and by no means a joint and several power. The execution can be by neither of the designated parties singly, but must always be strictly by both in conjunction.^ Though if both agree that a certain course shall be pursued, and that an executive act oc- curring therein shall be done by one alone, that act may be legally performed according to such arrangement. This is mere matter of detail, and pertains to the execution, not to the exercise, of the power. For example, where their power is to borrow money, if they agree upon all the items going to make up the transaction, but that the note given for the loan shall be indorsed by the cashier alone, this will be a perfectly regular and sufficient execution of the duty intrusted to them.* Authority given by the directors to the president to sell and convey certain real estate includes an authority to enter into a valid written contract for such sale and conveyance to be made at a certain day future.® Such is the general doctrine, forbidding any species of con- tract to be made by a president on behalf of his bank. But in some few cases, such as will occasionally arise, in which the 1 Olney v. Chadsey, 7 R. I. 224 ; Brouwer v. Appleby, 1 Sandf. 158 ; Spyker V. Spence, 8 Ala. 333. 2 Mt. Sterling Turnpike Co. v. Looney, 1 Met. (Ky.) 550; Farmers' Bank V. MoKee, 2 Penn. St. 318. 3 RIdgway v. Farmers' Bank, 12 Serg. & R. 256 ; Macbean t>. Irvine, 4 Bibb, 17. * Fleckner v. Bank of United States, 8 Wheat. 334. s Augusta Bank v. Hamblet, 35 Me. 491. OP OFFICERS AND AGENTS. 149 special contract could be condemned as invalid without the necessity of making the prohibition against contracting at all quite so sweeping and absolute, the courts have contented them- selves with holding that a president cannot bind the bank in any unusual manner or in any undertaking lying outside of its customary routine of business. Upon this narrower, ground have been based rulings : (1) That a bank president has no right to agree to receive deposits of money on interest, it not being a part of the ordinary business of banking to do so.^ (2) That the president cannot charge the bank with any greater liability for the safety of a special deposit than the bank is wont to undertake for such.^ To the same principle may be also referred the ruling that the promise of the president and cashier that an indorser shall not be liable on his indorsement does not bind the bank, though it may be so specific as to bind the president and cashier as individuals. An agreement so contrary to the usual course of business and to the probable interest of the corporation can be made by no less an authority than that of the directors. In a recent case it is a qucere : Whether the president of a bank has power to bind the bank by his agreement with an accommodation acceptor of a draft discounted by the bank that the bank will not look to him for payment of the draft (other security having been furnished to the bank by the drawer). It was not necessary to determine this point, because the arrangement between the president and the ac- ceptor was merely verbal, and the court held it void under the Statute of Frauds.^ Admissions of the President. Admissions of the president affect the bank only when they relate to matters within the scope of his agency.* The fact of 1 Fulton Bank u. New York & Sharon Canal Co., 4 Paige, 127. 2 Foster v. Essex Bank, 17 Mass. 479. s Davis V. Randall, 115 Mass. 547. * Spalding v. Bank of Susquehanna County, 9 Barr, 28. See remarks on Declarations and Admissions of Cashiers, post. 150 POWERS, DUTIES, AND LIABILITIES his high and responsible position does not operate to extend in any degree the rigidity of this rule of the common law. Personal Undertakings for the corporate Benefit. If the notes of the corporation are protested for non-pay- ment, and are thereafter paid by the president individually from his own private funds, for the honor of the bank, the whole transaction having been conducted throughout in strict good faith, the president becomes thereby a creditor of the bank for the amount so paid by him, and may prove the claim against' the bank in insolvency.^ But if the president guar- antees or indorses the promissory notes of the bank, he will be presumed to do it gratuitously and from the disinterested motive of promoting the welfare of the institution over which he presides. He will not be allowed to maintain any claim by reason of his so doing, except upon proof of an explicit con- tract entered into by himself with the government of the corporation. 2 Payment of the President. With regard to whether or not a president is entitled to pay- ment for his services, no absolute and unvarying rule can be laid down. No implied promise to pay him, any more than to pay any other director, is raised by his appointment to the office. On the contrary it has been said that the presumption is that he is not to be paid. But, frequently a bank requires so much of the time of its president to be devoted to its interests and affairs that it in a great measure precludes or materially interferes with his prosecution of other and private business. In such cases it is customary to pay him a salary, as a cashier or any other officer who devotes his time to the service of the bank is paid. Ordinarily the matter of his compensation, in such c^ses, is left to be arranged by the board of directors,^ and whatever they vote to pay him he has an unquestionable > Bank Commissioners v. St. Lawrence Bank, 8 Barb. 436 ; 3 Seld. 135. 2 Leavitt v. Beers, Hill & D. 221. ' Holland v. Lewiston Falls Bank, 52 Me. 564. OP OFFICERS AND AGENTS. 151 title to recover. But if they take no definite action in the premises, his right to demand pay will depend upon the nature of the services rendered by liim and upon all the circumstances attendant upon his acceptance and incumbency. If these suflSce to show that he had a right to expect that he was to be paid, and that the bank, or board of directors, ought to have so understood and ought to have expected to pay him, then he may recover what would have been a fair salary for the posi- tion. The presumption that payment is to be made arises where the work or employment is usually the subject of pay. But it does not attach simply because the work is valuable, and therefore might properly be given in exchange for money. The custom or usage to pay for such work must be existent and established like any other custom or usage, so that it cannot but be presumed that the parties respectively conferred and accepted the office and, functions of president in view of this custom and usage and with the expectation of conforming to it. But informal statements, or remarks made by the presi- dent to various individuals, members of the board of directors, to the effect that he shall expect or require pay, have no bear- ing upon his rights whatsoever ; especially where no definite reply appears to have been elicited.^ If the bank charter dis- tinctly provides that the president shall have no pay unless it be voted to him by the directors, any service which he may perform for the bank will be presumed to be done by him as president, and will give him no extraordinary right to pay, unless from its nature or from evidence adduced, it is shown beyond a reasonable doubt that the act was really rendered outside of the duties appurtenant to the official position.^ Cashier. In the discussion of the powers and duties of cashiers we enter upon a very difficult topic. In no other branch of ban'c- ing law are the usages of business so frequently at variance 1 Sawyer v. Pawners' Bank, 6 Allen, 207 ; Olney v. Cliadsey, 7 R. I. 224 ; HargroTes v. Chambers, 30 Geo. 580. ^ Olney v. Chadsey, supra. 152 POWERS, DUTIES, AND LIABILITIES with the rules of law, so powerful in warping and altering those rules, so diverse among themselves in different places and different institutions and at different times. In no other branch of banking law is it so difficult to reconcile the deci- sions and opinions uttered from numerous independent judicial tribunals, or to educe from them generalizations, principles, and rules in any satisfactory shape. The key-note to the whole subject lies in this : that the office of the cashier is strictly executive. He is the business officer of the bank, but in the sense of one who transacts the business, not of one who regulates and controls it. The grand diificulty which has been experienced in defining his exact functions has always lain in the necessity of giving him sufficient practical power to enable him to conduct the daily routine of business without trespassing upon the domain of discretionary authority which pertains exclusively and for the most part inalienably to the directors. Acts which demand only confidence in the integrity of the official, and familiarity with the forms and cus- toms of business, acts strictly of perfofmance, which do not rise to the importance of the semi-judicial character, are those which he is properly delegated to do. But the responsible con- duct and management of the affairs of the institution, upon the soundness and wisdom of which its prosperity and success depend, which call for the exercise of a high degree of care, knowledge, and experience, and a semi-judicial discretion, which demand general business qualifications of a high order, are not, and never have been held to be, appurtenant to the office of cashier. He is properly the executive agent of the directors. It is his duty to carry out what they devise. They are i-esponsible for the soundness of the action resolved upon ; he is responsible for the honesty, accuracy, regularity, and skill with which that action is carried out. They are the mind and he is the hands of the corporation. They may decide to make a certain loan or discount, to sell or mortgage corporate property. He will pay over the money, take the borrower's promissory note, and see that it is in proper form ; he may, by direction of the board, affix the corporate signature and seal, and make delivery on behalf of the corporation, of all OF OFFICERS AND AGENTS. 153 instruments necessary to complete the conveyance or the mort- gage. It is not wholly unapt to liken the board of directors to a bench of judges, and the cashier to the clerk of court. There are certain functions which it is the duty of a cashier to perform, and certain acts which he has the right to do on behalf of the bank, simply by virtue of his induction into the office. They are inherent in it, and taken together they con- stitute the component parts which go to make it up. Others may be added, but these are essential. Publicly to call a per- son by the title of cashier is to invest him with the power, as towards the public, of binding the bank by his action in pursu- ance or fulfilment of any and all these inherent powers and duties. It is in fact a declaration of his agency. If the bank nominates and holds out A. B. as its " cashier," it in effect says to the world that A. B. is duly authorized to transact on its behalf all business which judicial decisions or banking usages have rendered inherent functions of the office designated by this name. Any act done by him within this scope and on behalf of the bank is the act of the bank.^ It would seem almost a work of supererogation to make this statement, but we have been led to do so by noticing in the argument made lately by very eminent counsel in an important case, that where the bank charter or the general banking act under which the corporation was established gave to the directors the power to define or limit or prescribe the powers and duties of the cashier, their neglect so to do left the cashier without either powers or duties. The position is novel, perhaps in- genious, but certainly utterly untenable, and has since been so held by the court.^ The conference upon any person of the name and official position of cashier carries with it, by a neces- sary and a strictly legal implication, certain duties and certain powers, towards both the bank and the public, of the nature above described. Again and again has this fact been recog- nized in judicial decisions, equally where the directors were, and where they were not, endowed by the law originating the corporate being with authority to define or prescribe the powers ' Bumham v. Webster, 19 Me. 232. 2 Merchants' Bank v. State Bank, 10 Wall. 604. 154 POWERS, DUTIES, AND LIABILITIES and duties of the officers ; equally where they had and where they had not undertaken to exercise this authority. These are the customary functions, ordinarily appurtenant to the office itself. They in no case require to have their existence affirmatively established ; but on the other hand demand strong negative testimony to controvert the legal presumption of their universal force. The great bulk of the cases which will be cited in illustration of the present topic proceed upon the tacit recognition of this doctrine ; but in the foot-note are cited a few of those, wherein the language more distinctly asserts it.i In the case of the United States v. The City Bank of Columbus, Mr. Justice Wayne said that, " though the directors had power under the act of incorporation to fix the duties of the cashier, and though whether they had done so or not did not appear," yet " the acts of the cashier done in the ordinary course of the business actually confided to such an officer may well be deemed prima facie evidence that they fell within the scope of his duty." As a matter of fact, directors seem seldom to have cared to draw up regulations for the government of their cashiers, and when they have done so their regulations have been so general in phraseology, or have so accurately followed the principles which the law itself lays down in the absence of such directorial action, that they appear seldom, if ever, to have affected the decision in any reported cause. That the power given to directors to define, &c., the powers and duties of a cashier, does not enable them to deprive him of ordinary powers which by virtue either of judicial de- cisions or of banking usages the public are entitled to regard as inherent in his office, or at least that their action to this effect would not be binding as towards any third party who had not been expressly notified of it, is a principle which has been discussed in a general form,^ earlier in this chapter, and 1 Sturges V. Bank of Circleville, 11 Ohio St. 153 ; Minor v. Mechanics' Bank of Alexandria, 1 Pet. 46 ; Wild u. Bank of Passamaquoddy, 3 Mason, 505 ; Bank of Pennsylvania v. Reed, 1 Watts & S. 101; Baldwin v. Bank of Newbury, 1 Wall. 234; United States v. City Bank of Columbus, 21 How. 356; Badger w. Bank of Cumberland, 26 Me. 428. 2 Also see, especially. Bank of Vergennes v. Warren, 7 Hill, 91 ; Commercial Bank of Buffalo v. Kortright, 22 Wend. 348 ; Sturges v. Bank of Circleville, 11 Ohio St. 153. OF OFFICERS AND AGENTS. 155 which needs no special elucidation with respect to cashiers as a class, in distinction from other officers. The question whether any particular act does or does not fall within the general power of a cashier has been said to be a question of law for the court and not of fact for the jury.^ The services of a jury may indeed be called in when it is claimed that acts or conduct of the board have amounted to a public holding out, or that a banking usage relative to the subject of dispute exists.^ But, after the jury has found upon these mat- ters, it still remains for the court to declare whether or not the usage is one which accords with and will be sanctioned by law ; and whether the holding out was within the possible legal scope of a cashier's authority. Principles already laid down in other connections enable us to divide the various acts, which cashiers may undertake to perform, into three entirely distinct classes, to wit : First, those acts which constitute the ordinary and customary functions of cashiers ; these any person dealing with the bank is war- ranted in believing that the cashier is duly authorized to do, and may hold the bank upon them as if the cashier was so authorized, however the real truth may be, save only in cases where his want of authority is affirmatively proved and actual knowledge of this fact is brought home to the third party. Second, those acts which the cashier has no inherent power to perform simply^by virtue of his office, but which are of such a nature that after their performance has been decided upon they would naturally and properly be executed through and by him ; a third party dealing with the cashier in any of these transactions has the advantage of a presumption of law in favor of the legality of his official conduct ; his exercise of the power is prima facie evidence of his possession of it ; but the bank will frequently be allowed to rebut this presumption and conquer the prima facie case by showing that as a matter of fact the cashier had never been clothed with the power he assumed ; so in such matters if the third party neglects to 1 Farmers' & Mechanics' Bank v. Troy City Bank, 1 Dougl. 457 ; Peninsular Bank v. Hanmer, 14 Mich. 208 ; Merchants' Bank v. State Bank, 10 Wall. 604. 2 Merchants' Bank v. State Bank, 10 Wall. 604. 156 POWERS, DUTIES, AND LIABILITIES assure himself of the actual delegation of authority to the cashier, he deals at his own peril, having in his favor a primary presumption, it is true, but a presumption of which the bank may be permitted to disprove the truth, and thereby to re- lieve itself from all responsibility in the premises. Third, those acts which the cashier may undertake to perform in per- fectly good faith, and perhaps under color of authority, but which the law imperatively and absolutely precludes him from performing ; such are the discretionary and semi-judicial acts which it is the exclusive province and inalienable duty of the directors to perform at their board meetings, power to do which on their behalf they can delegate to no other officer whomso- ever. No excuse of circumstances is admissible to give to these acts any validity or binding force upon the bank. However honest and ignorant of the illegality both parties to the transaction may have really been, yet neither can be heard to deny his knowledge of the law. These principles will be illustrated in the following sections. General Statement of the Cashier's Duties. The cashier is the chief " executive officer, through whom the whole financial operations of the bank are conducted." ^ Its money transactions, of every description, though they may not be determined by his discretion, will yet be conducted by and through him.^ He has charge of all its property, its money, its securities, its valuable papers.^ He has the superintendence of its books of accounts.* Judge Shepley has given the Tollowing very good abstract of the ordinary duties of a cashier : " To keep the funds, notes, bills, and other choses in action, of the bank, to be used from time to time for the exigencies of the bank ; to receive directly, and through subordinate officers, all moneys 1 Merchants' Bank v. State Bank, 10 Wall. 604, at p. 650. 2 Baldwin v. Bank of Newbury, 1 Wall. 234 ; United States v. City Bank of Columbus, 21 How. 356. s Wild V. Bank of Passamaquoddy, 3 Mason, 805 ; I'ranklin Bank v. Steward, 87 Me. 519. 4 Sturges V. Bank of Circleville, 11 Ohio St. 163 ; Baldwin v. Bank of New- bury, 1 Wall. 234. OP OFFICERS AND AGENTS. 167 and notes of the bank ; to surrender notes and securities upon payment ; to draw checks ; to withdraw funds of the bank on deposit ; and generally to transact, as the executive officer of the bank, the ordinary routine of business. But the ordinary duties of a cashier do not comprehend the making of a con- tract, which involves the payment of money, without an ex- press authority from the directors, unless it be such as relates to the usual and customary transactions of the bank." ^ The Cashier's Subordinates. Of course, even in a small corporation, it will be impossible for the cashier personally to do all the business included in these general functions. He must have his subordinates, whose offices will be offshoots of his own. " They are under his direction, and are, as it were, the arms by which designated portions of his vari- ous functions are performed." ^ But he will not be liable for the default of any of these subordinates, unless his own laches or collusion has caused or aided it. The paying and receiving tellers are in fact only officers detailed to take charge, each of a special duty, falling within the general range of the cashier's posi- tion.^ A paying teller can only pay out money, and a receiving teller can only receive it, on behalf of the bank. But, though there be incumbents, acting in each of tliese respective offices, there is judicial authority for saying that the cashier, by his gen- eral and higher power, may at any time make or receive a pay- ment on behalf of the bank. Perhaps on any particular occasion his doing so might be such a foolish interference in a business of which he did not know all the details from hour to hour, that he could be held liable to the bank for negligence or an im- proper performance, if he should pay out money when he ought not. But this would be only a question of liability arising wholly between the principal and the agent. The act itself would be within the scope of a cashier's authority, and would bind the 1 Morse v. Massachusetts National Bank, 1 Holmes, C. C. 209. 2 Merchants' Bank v. State Bank, 10 Wall. 604. " Farmers' & Mechanics' Bank v. Butchers' & Drovers' Bank, 16 N. Y. 125. 158 POWERS, DUTIES, AND LIABILITIES bank in favor of any innocent third party.^ This does not necessarily conflict with the rule that, if the bank nominates a certain person to receive money, it will be bound only by pay- ments made to him. For, though the bank may nominate a receiving teller, yet the cashier has a co-ordinate power with him in this respect by virtue of the general scope of his agency. The bank simply has two officers competent to receive, instead of only one. But, though the cited case seems to go the length of sustaining this doctrine, the opinion embodying the views of the court is far from carrying perfect conviction with it. Prac- tically the confusion incident to conducting business in accord- ance with the rule would breed endless mischief. As matter of strict law, it is certainly fair to argue that the especial action of the bank in giving to another the charge of a function which otherwise would belong to the cashier, is equivalent to a public taking away of that function altogether from the cashier. Sub- stantially it is expresgio unius, exclusio alterius. The teller is the cashier's subordinate, and must take orders from him. But the precise act df receiving or paying cash over the counter may be regarded as exclusively within tlie teller's province by virtue of the supreme order of the board of directors, with which even the cashier cannot interfere. Collection of Debts. It is the duty of the cashier to superintend the collection of debts owing to the bank, and to make up the accounts of the sums due. Payment of them is properly made to him in his official capacity, and discharges the debtor, even though the cashier subsequently misappropriates the money, and fails to bring it to account in the bank. Upon the receipt of payment the cashier may deliver up the evidences of indebtedness held by the bank, may execute an acknowledgment, release, or ac- quittance to the debtor if need be, and may deliver and trans- fer back to him any pledge or collateral security given by him to the bank.^ It has even been held that where the borrower 1 State Bank v. Kain, 1 Breese, 45. 2 Concord v. Concord Bank, 16 N. H. 26 ; Badger v. Bank of Cumberland, 26 Me. 428 ; United States v. City Bank of Columbus, 21 How. 356. OF OPPICEES AND AGENTS. 159 had given a mortgage of real estate to the bank, the cashier might legally discharge the same by virtue of his ordinary authority. Or if the bank has bought the mortgaged property at the sheriff's sale, the cashier may assign the certificate of sale. It makes no difference though the instrument may re- quire to be executed under the corporate seal. The party who has made the payment is entitled to the discharge or assign- ment. In seeking to obtain it, he is justified in dealing with the principal business officer of the bank.^ After all, it is a mere formal act, and though the corporate seal may be required, yet the ordinary assumption of the importance and high character of sealed instruments can hardly be said to attach to these pro- ceedings. It was also suggested in the Bank of Vergennes case that, if the directors alone could act in the matter, they might practically rob the payer of his legal rights, either by refusing to meet at all, or by neglecting to take action in the premises. This power of the cashier is based upon the fact that he is the officer having the responsible charge and control of the entire personalty of the bank for till ordinary executive pur- poses. Though if any portion of the personalty has been with- drawn from his charge and control, and devoted to any special use by the government, as where the directors had deposited a mortgage in pledge with the State authorities, the power and responsibility of the cashier cease in respect of the portion thus appropriated by his superiors' in control.^ Whatever preliminaries are necessary to precede a valid demand for payment of money owing to the bank should be attended to and performed in due shape and season by the cashier. Such are the indorsement of notes payable to the order of the bank, and the transmission of them to proper agents in time for demand if they are payable at any distant place. The indorsement must be made in form according to the orders of the directors or the established usage of the bank in its dealings with the agent to whom the note is to be sent. Thus, it may be an indorsement in blank, an order to pay to 1 Ryan v. Dunlap, 17 111. 40; Bank of Vergennes v. Warren, 7 Hill, 91. 2 Mitchell V. Cook, 29 Barb. 243. 160 POWERS, DUTIES, AND LIABILITIES the agent, or to the agent or his order, or to the agent for col- lection, or to the agent or his order for collection. If the cashier, whose duty and authority it is to make the indorse- ment in a certain one of these forms, makes it in another, as between himself and the bank it is a breach of his official duty ; and, if any injury result therefrom, he may be held liable in damages. If the note is not promptly paid, so that the formalities of protest become necessary, it is the duty of the cashier to see that the note is duly sent to the notary with proper instructions.^ The cashier may also, it has been said, deliver notes to an attorney for collection, authorizing the institution of suits upon them, if it be necessary .^ Probably this is sound law, though we have only one case in support of it ; and in that case the court finally propped the decision, which it at first inclined to render upon general- principles, by stating that the particular cashier had been shown to have done the same thing before, and always with the knowledge and sanc- tion of the corporation when it became notified of his action. The only objection to the admission of the doctrine lies in the fact that, as we have already seen, the whole business of litiga- tion is generally deemed to lie strictly within the province of the president. The cashier cannot appear and defend suits on behalf of the bank. Though he is financial officer and in charge of the books, and so might be supposed to have a peculiar knowledge in the matter, he cannot answer even where the bank is summoned as garfiishee.^ The only case where he has been allowed to take any part whatsoever in legal proceed- ings is one which was decided in Illinois, wherein his appeal was allowed to be good on behalf of the bank. This single case * is so utterly at variance with the general and uniform current of opinions upon the subject that it might very prob- ably be expected to be overruled. Yet it does not seem un- reasonable to sustain the views of the New Hampshire bench. 1 Hartford Bank v. Barry, 17 MassI 94. The special power of indorsement is discussed, witli authorities, post, in this chapter. 2 Eastman v. Coos Bank, 1 N. H. 23. 3 Branch Bank v. Poe, 1 Ala. 396. * Moreland v. State Bank, 1 Breese, 205. OP OFFICERS AND AGENTS. 161 Where the decision as to the wisdom of entering upon litiga- tion involves the consideration of doubtful points of evidence and law, as must always be more or less the case in all disputed claims, the higher discretion of the president may properly be demanded. But the simple sending of a note to an attorney with orders to issue a writ, or even make an attachment thereon, is a simple, inexpensive proceeding, which might as safely be intrusted to the cashier as any other part of the process of collection. Viewing the matter praqtically, it seems a rather technical and quibbling ruling to hold that, since the general litigation of the bank is beyond his province, therefore he can- not give directions to the bank's attorney to go through the form of uttering a writ on an uncontested note. Though if he had reason to think that the maker of the note designed to contest its validity upon any ground of fact or of law, then it loses the simplicity of a mere collection from a delinquent but undisputing debtor, and he should leave the determination concerning the propriety of a lawsuit to the customary discre- tion of the president. A power certainly very much greater than this has been de- clared to reside in the cashier. It has been said that in the course of his fulfilment of his duty in taking all proper meas- ures for securing the eventual collection of the debt, he may act about it by way of compromise.^ Fortunately this other- wise wide discretionary power is in some degree restricted by the addition in the New York case of the requisition that his action should accord with usage and the course of business. Unless the same restriction is added in the Pennsylvania case, it must be said that that case is at variance with general prin- ciples which it cannot be potent to alter so materially. With- out these words it must be simply impossible to reconcile these decisions with those which have been already cited as confer- ring upon the directors the power of compromising claims of the bank. Evidently the power is discretionary, and one which in its exercise may often call for considerable reflection and a high degree of judgment. It is strictly a sacrifice at • Bridenbecker v. Lowell, 32 Barb. 9 ; Bank of Pennsylyania u. Eeed, 1 Watts & S. 101. 11 , 162 POWERS, DUTIES, AND LIABILITIES least of nominal property of the bank. Evidently by good rights it should be a function of the board and not of the exec- utive officer. The cited decisions must be construed simply to intend that this function, though properly directorial, is nevertheless not inalienably so, and may therefore be delegated to the cashier ; and that such delegation may be conclusively presumed as against the bank upon proof that the usage and ordinary course of business in the bank is to that effect. Strictly speaking, this is all that the cases really decide, and it is obvious that they should not be carelessly stretched as if they announced the general doctrine that it is an inherent element of the cashier's general authority to compromise on behalf of the bank any of its debts or demands. Where a claim of the bank has been pushed to judgment and execution, the cashier, delivering the execution to the sheriff to levy, has not authority to bind the bank by any undertaking to indemnify the officer. His agreement to this effect, though purporting to be made by him in his official capacity, will be invalid as against the bank, though it may operate to hold him personally.^ Power of Borrowing. The cashier may borrow money on behalf of the bank, and may bind the bank by a promissory note executed therefor.^ Such is the usage of the banking business. Though if in any individual institution any other officer is selected for this duty, the cashier could no longer bind the bank to any lender who was aware of the variation. The right of borrowing is a func- tion of which he will be wholly deprived by the act of the directors in selecting any other person as their general borrow- ing agent. But the usage to allow him to borrow is so univer- sal that notice of the deprivation must be brought home to any person who is to be affected by it. Otherwise the public are warranted in dealing with him on the assumption that he pos- 1 Watson V. Bennett, 12 Barb. 196. 2 Barnes v. Ontario Bank, 19 N. Y. 152 ; Ballston Spa Bank ». Marine Bank, 16 Wis. 120 ; Sturges v. Bank of CirclevUle, 11 Ohio St. 153; Eidgway v. Farm- ers' Bank, 12 Serg. & R. 256. OP OFFICERS AND AGENTS. 163 sesses it. The power extends only to borrowing in the ordi- nary course of the daily business of the bank. For example, if the bank be behindhand at the clearing-house, the cashier may properly borrow of any bank which has a surplus, giving in return his check or memorandum for the amount, and agreeing to pay the customary rate of interest. But he can- not borrow simply for the purpose of increasing the available funds of the bank, so that in effect its disposable working capital shall be increased. This is exercising a discretionary control over its affairs which none but the directors possess. Neither in any case can he borrow money to use for other than strictly banking purposes. Any person lending to him with a knowledge that the loan is to be thus improperly used, will not create a valid obligation upon the bank. But in the absence of such actual knowledge the presumption of regularity will bind the bank to a lonria fide lender, however wrongful and un- authorized the conduct of the cashier in the transaction may in fact have been. So if special instructions and authority are given to a cashier for the obtaining a loan or discount, whether the same are to govern him generally in all such dealings, or only in a particular instance, all persons having notice of this special delegation of power will hold the bank only upon con- tracts made within its limits. So far as they are concerned, it is a valid restriction of the cashier's power to deal with them. But contracts with persons without notice will bind the bank, if within the ordinary business of borrowing. It is not un- common to empower the president and cashier to effect a loan or discount ; in such case they must agree upon the contract jointly, and the cashier alone could bind the bank only to per- sons who believed him to be acting in pursuance of his general authority, and were ignorant of this special delegation to the two jointly. If a loan is contracted by the cashier in such a manner that it does not bind the bank, it cannot be consid- ered that the mere circumstance of his turning the money into the mass of the bank funds, and allowing it to remain there, and to be used as part of the floating assets, will suffice to render the bank liable upon it as a corporate debt. The fact and nature of the transaction must in some way be brought 164 POWERS, DUTIES, AND LIABILITIES sufficiently home to the official knowledge of the directors, so that their failure to repudiate and undo it must be construed to amount to an acceptance and ratification of it on behalf of the corporation. 1 Power to dra-w Checks. The cashier has power to draw checks or drafts upon the funds of the bank deposited elsewhere. Indeed he is ordi- narily the only officer of the institution who can legally do this. It is proper for him to designate himself as " Cashier of the Bank," in order to show that he is acting officially, and that the check is intended to withdraw corporate funds. But if he fails to make this fact clear by these or any other words in the instrument, yet if the drawee bank pays the check from corporate funds, it will be protected and the payment will be valid, if, as a matter of fact, the cashier was acting officially, and did intend to draw against the balance standing to the credit of his corporation. To prove this, parol evidence is admissible, and by such evidence the paying bank may even be allowed to explain away the fact that the check has been credited upon its books to the cashier's private account, and to rebut the inference against itself, which must at first arise from this state of the accounts.^ ' Charge of the Personalty of the Bank, and herein also of Indorsements. The cashier has full charge, control, and power of disposi- tion over all personal property of the bank, whether specie, notes, bills, bonds, or of whatsoever other description it may be.^ All its negotiable paper he may negotiate and transfer on its behalf,* and to this end may indorse it over, so as to bind the ' Ballston Spa Bank v. Marine Bank, 16 Wis. 120. ' Mechanics' Bank v. Bank of Columbia, 6 Wheat. 326 ; United States v. City Bank of Columbus, 21 How. 356 ; Merchants' Bank v. Central Bank, 1 Kelly, 418. 3 Wild «. Bank of Passamaquoddy, 3 Mason, 505 ; Pranklin Bank v. Steward, 87 Me. 519 ; Morse v. Massachusetts National Bank, 1 Holmes, C. C. 209. * Wild V. Bank of Passamaquoddy, 3 Mason, 505 ; State Bank v. Wheeler, 21 OF OFFICERS AND AGENTS. 166 bank like any ordinary indorser on similar paper. But the character of negotiability is a strict limitation upon his inher- ent power. He cannot, solely by virtue of his office, pass title to non-negotiable paper of any sort, or to any other description of corporate property, as for example a judgment given in favor of the bank. His action in making transfers of this latter- description can be sustained only by authority directly conferred by the directors, or arising from established usage.'' Of course this power of transfer, like almost every power which an agent can possess, may easily be so abused by him as to render him liable to his principal. It is very difficult to say precisely how much discretion can be properly exercised by the cashier in trading in negotiable securities. Clearly he has no right to push it to that point where virtually it becomes a considerable and important branch of the bank's business, and is nevertheless conducted solely by himself. It was never contemplated either by the legislature in conferring the franchise or by the stock- holders in investing their capital, that trading in negotiable securities, if carried to such an extent as to become an essen- tial and vital element in the corporate business and prosperity, should be conducted solely upon the single discretion of the cashier. The management of the important affairs of the in- stitution was intended to be the function of the directors. We can only state this principle in general terms. It would be a matter of infinite difficulty to draw the boundary line, and no adjudicated cases assist us in so doing. Certainly in a well- ordered bank the directors would not allow the cashier to usurp their powers improperly in this respect. Nor could he do so without their knowledge. It may also happen that a cashier may wilfully make a transfer or indorsement in direct disobedience to special directorial instructions. But in any of these cases of improper transfers by the cashier, he simply renders himself responsible to the bank for the consequences of his misconduct. The outside party dealing with him in Ind. 90; City Bank v. Perkins, 29 N. Y. 554; Cooper v. Curtis, 30 Me. 488; Kimball v. Cleveland, 4 Mich. 606 ; Crocket v. Young, 1 Sm. & M. 241 ; Everett V. United States, 6 Port. 166 ; Bridenbecker v. Lowell, 32 Barb. 9. 1 Barrick v. Austin, 21 Barb. 241 ; Holt v. Bacon, 25 Miss. 567. 168 POWERS, DUTIES, AND LIABILITIES good faith, and without notice of the irregularity, holds the bank as if the transaction had been unobjectionable through- out. For it is an inherent power of the cashier, which he exercises simply by virtue of his office, to make the transfer, and no person can be required, in a case where no circum- stances of suspicion put him upon inquiry, to go behind this authority. If the agent exceeds it, the matter lies wliolly between himself and his principal.^ Since the cashier has the general power to indorse over bills and notes of the ^bank, for the purpose of passing title therein, he of course has the lesser and included power to indorse for special purposes, as for discount. So also for collection, and for transmission for collection, he may indorse both paper belonging to the bank and paper intrusted to it for collection, or given to it as collateral security.^ If paper is indorsed by him for this special and limited purpose, and is subsequently fraudulently converted, yet if the indorsement be general and the paper comes to the hands of a bona fide holder for value and without notice, who presumes and has a right to presume from the style of the indorsement that it was made in the ordi- nary course of business, and created a guaranty on the part of the bank, the bank may be held to respond as an ordinary indorser.* The risk is voluntarily incurred by the bank in putting its indorsement in such a form that it does not convey notice of its true character when an attempt is made to use it fraudulently. It has been specially held that a cashier has power to indorse over negotiable paper in payment of debts of ^ City Bank v. Perkins, 29 N. Y. 654. In this case the cashier had pledged a note, which it was urged he had no right to do. The suit was brought against the maker by a bona fide holder for value and without notice, claiming under the cashier's indorsement. The court did not pass upon the cashier's authority, holding that, whether he had it or not, yet the plaintifT had a sufficient title to protect the maker in paying to him and could oblige him to do so. Gillett v. Phillips, 3 Kern. 114 ; transfer by cashier of notes to an amount in excess of what he may legally transfer, is void, except as to bona fide holder without notice. St. Louis Perpetual Ins. Co. v. Cohen, 9 Mo. 416 ; transfer in bad faith binds in favor of bona fide holder for value and without notice. 3 Elliot V. Abbot, 12 N. H. 549 ; Corser v. Paul, 41 id. 24 ; Potter v. Mer- chants' Bank, 28 N. Y. 641. » Robb V. Boss County Bank, 41 Barb. 586. OF OFriCERS AND AGENTS. 167 the bank ; ^ also as preliminary to demand and notice, and to the institution of a suit upon it.^ But these limited powers are of course included in the general authority, which is amply supported by abundance of judicial decisions, and which may be stated in the broadest terms : That the cashier by his in- dorsement of negotiable paper on behalf of the bank will always bind the bank to the full extent that any individual indorser of like paper and in like form would be bound, unless the holder for value of the indorsed paper took it with actual notice of some fact rendering the indorsement irregular and invalid. Many of the cases cited, supra, note 4, p. 164, assert that the consideration for the transfer need not appear upon the instrument, but will be presumed. The presumption is open to rebuttal by proof that no consideration or only an inade- quate one passed. But rebutting evidence of this description can be used only against the original transferee, or against a subsequent holder with notice. A clerk who in the temporary absence of the cashier is charged with the performance of the duties of that office, does not succeed to the cashier's full powers, unless by virtue of a special vote and instructions from the board of directors. Otherwise the cashier can clothe him with no greater power than simply such as is necessary for carrying on the usual and ordinary business of the bank, such as the payment of checks, the receipt of payment upon notes held by the bank, and the delivery up of the paid notes. But the delegate has no authority to transfer or pass title in any paper of the bank. Paper held by the bank in its own right or for collection for other persons, and payable elsewhere, he may transmit to the agents of the bank for collection ; and if it requires indorsement as preliminary to collection, he may indorse, but only in such limited form as is strictly indispensable for enabling the collec- tion to be made, and not so as to vest any other or higher title in the indorsee. Where he so sends forward notes for collec- tion, whether bearing his indorsement on behalf of the bank or not, the agents receiving them will acquire no title in them and 1 Crocket v. Young, 1 Sm. & M. 241. ' Hartford Bank v. Barry, 17 Mass. 94. 168 POWERS, DUTIES, AND LIABILITIES no lien of any description upon them for any balance due from the transmitting bank.^ Forms of Indorsement. The various forms of indorsement which have been employed by cashiers have given rise to important questions concerning their respective validity. The possible divergence seems to be limited substantially to four different methods, viz., " Bank, by A. B., cashier; " " A. B., cashier of the Bank ;" " A. B., cashier ; " or finally simply the name of " A. B." with- out any other words whatsoever. These are the four cardinal forms which alone call for consideration. Others are only slight modifications of these, such as " For the Bank, by A. B., cashier," or verbal variations by the use of simple abbreviations, as " cash." " cas." or " cr." Such will be easily recognized as substantially identical with one or other of these four, and will be governed by the same rules, respectively. It is obvious at once that the first of these forms is the technically proper one. It alone accords with the old estab- lished rule of the common law of agency, that where a con- tract is made through an agent, the principal must be directly named as the contracting party, properly with the addition of further words sufficiently indicating that the principal in this particular case is contracting through the instrumentality of A. B., authorized agent, and the signature must be in like manner of the name of the principal with the additional inti- mation that it is written by his agent on his behalf.^ But though it is safest and wisest always to indorse in this manner, and so to obtain the full protection of the ancient and general principle, yet special decisions have declared other forms, theoretically less correct, to be sufficient. So it can no longer be questioned that the second and third forms will bind the bank.^ The words appended in those to the cashier's name 1 Potter V. Merchants' Bank, 28 N. Y. 641. 2 Spear v. Ladd, 11 Mass. 94. 8 State Bank v. Fox, 3 Blatchf. 431 ; Bank of Genesee v. Patchin Bank, 3 Kern. 309 ; Northampton Bank v. Pepopn, 11 Mass. 288 ; Folger v. Chase, 18 Pick. 63 ; Bobb v. Eoss Coirnty Bank, 41 Barb. 586 ; Bank of the State of New OP OFFIGERS AND AGENTS. 169 certainly signify very clearly that he was indorsing officially and on behalf of the bank, and that the contemporaneous inten- tion and understanding of both parties was that the bank should be bound by the indorsement. As a matter of fact, probably in all such cases that ever occurred, the undertaking was really that of the bank, and the law, with its usual flexi- bility in such circumstances, found little difficulty both in sustaining it as such, and at the same time in adroitly saving the integrity of the ancient theory. It was declared, as appears by the cases cited in the last note, that since the intent was to be regarded as sufficiently certain upon the face of the instru- ment, the holder was authorized to write above the signature the phrase " For the Bank," or " The Bank, by," &c., or any other words that might be necessary, fully to express and to carry out the intent ; also that he might strike out any superfluous or inconsistent words originally written. The authorities which adopt this theory, and support the legality of indorsements made in the described forms, are ample to put the matter beyond the possibility of any future doubt. The only contrary decision to be found in the reports is one rendered by no higher a tribunal than the Supreme Court of the State of New York, and this was very brusquely disposed of by a judge upon the same bench a short time after it had been given. His language was as follows : " The deci- sion in the Bank of the State of New York v. Farmers' Branch of the State Bank of Ohio, 36 Barb. 332, is not a controlling authority ; for I understand it has been reversed by the Court of Appeals ; and we must presume that the court, in giving that York V. Muskingum Branch of Bank of State of Ohio, 29 N. Y. 632 ; Mechanics' Banking Association v. New York & Saugerties White Lead Co. 35 N. Y. 505 ; Elwell V. Dodge, 33 id. 336. In this case it was held that the indorsement of " A. B., president " should be construed as the indorsement of the corporation upon proof furnished of the uniform usage of the corporation to indorse thus through its president. Ordinarily the president has no authority to indorse on the corporate behalf. Marine Bank v. Clements, 3 Bos. 600. The principle in this case is identical with that illustrated by the other citations. It has been held, in Wisconsin, that though the indorsement " G. B. Cas." be made for accommodation (and therefore wrongfully) it will yet bind the bank as towards a bona fide holder for value without notice. Houghton v. First National Bank of Elkhorn, 26 Wis. 663. 170 POWKRS, DUTIES, AND LIABILITIES decision, were not aware that the point had been often decided the other way." It is not to be supposed that any learned justice will ever again lay himself open to such imputations upon his professional knowledge. It is going a good way cer- tainly to uphold the third form wherein the name of the corpo- rate principal does not appear at all. The fact, of what bank the indorser was cashier, and consequently what corporation was bound by his signature, must be shown by extrinsic evi- dence, and may well have been unknown to some even of the holders of the paper, if it has been widely negotiated. But the adjudicated cases support both forms without partiality. Indeed they almost uniformly discuss only this third form. It seems as though the second form had always been tacitly admitted to be good, and only the third had held out hopes enough of invalidity to encourage litigation. But far as the courts have gone in declaring the indorsement in the third form to be binding as the indorsement of the cor- poration, they have yet much further to go if they are resolved to sustain the validity of the fourth form as a corporate under- taking. We find no adjudicated case which directly settles this point. But Judge Denio, in the case above cited, of the Bank of Genesee v. Patchin Bank,' declared that it was " essential to the operation of the rule" (to wit, that the holder might supply, in the second and third forms, the name of the bank in such shape as to make it a principal Endorser) " that the authority of the indorser to indorse for the corporation and to bind it, in full and due form, should positively appear" " Appear " doubtless means appear on the face of the instru- ment, not appear from extrinsic evidence. It is somewhat hard to reconcile with the strict force of this rule the support of the indorsement of " A. B., cashier," but it would be absolutely impossible if the language of the learned judge means any thing whatsoever, and it certainly has the ring both of sound law and of sound sense, to sustain the simple indorsement of " A. B." without more, as the corporate indorsement. Yet we are deterred from asserting that this view is certain law by the argument which might be based upon some of the abstract 1 3 Eern. S09. OP OFFICERS AND AGENTS. 171 principles laid down in the opinion delivered in the case of the Mechanics' Bank of Alexandria v. The Bank of Columbia.^ The instrument which demanded construction in that case was a check signed by the cashier. But the analogy is close, and perhaps the subject of how a cashier should sign checks drawn on behalf of the bank may be discussed here as appropriately as elsewhere. We shall give the bulk of the decision of the learned judge in his own language. Form of Signature of Checks. The facts were briefly these : "William Paton, Jr., cashier of the Mechanics' Bank of Alexandria, drew a check in form as follows : — Minor was the teller of the Mechanics' Bank. The check was one of the printed blanks from the official check-book of the bank. Other checks had been customarily drawn by the cashier on behalf of the bank, in the like form in all respects save that he usually added "Cas" or "Ca" to his name. Much testimony was introduced with the object of showing that in drawing this check he was acting officially and intended to draw it on behalf of the bank. Mr. Justice Johnson deliv- ered the opinion of the court, substantially as follows : " The merits of this case lie within a very limited compass. The question is, whether a certain act, done by the cashier of a bank, was done in his official or individual capacity ? Had the draft signed by Paton borne no marks of an official character 1 5 Wheat. 326. No. 18. Mechanics' Bank of Alexandria, June 25, 1817. Cashier of the Bank of Columbia, Pay to the Order of P. H. Minor, Esq , Ten Thousand Dollars. $10,000. WM. PATON, JUN. 172 P0WEB8, DUTIES, AND LIABILITIES on the face of it, the case would have presented more difficulty. But if marks of an official character not only exist on the face, but predominate, the case is really a very familiar one. Evi- dence to fix its true character becomes indispensable. . . . "... Upon comparing the exceptions [taken] with the evi- dence, it does not appear that they affirm any other proposition growing out of that evidence, but that the check on the face of it purported to be the private check of Paton ; and no extrin- sic evidence could be received to prove the contrary. " The ground on which it can be contended that this check was a private check is, that it had not below the name the let- ters ' Cas ' or ' Ca.' But the fallacy of the proposition will at once appear from the consideration that the consequence would be that all Paton's checks must have been adjudged pri- vate. For no definite meaning could have been attached to the addition of those letters without the aid of parol testimony. " But the fact that this appeared on its face to be a private check is by no means to be conceded. On the contrary, the appearance of the corporate name of the institution on the face of the paper at once leads to the belief , that it is a corporate, and not an individual, transaction ; to which must be added the circumstances, that the cashier is the drawer and the teller. the payee, and the form of ordinary checks deviated from by the substitution of ' to order ' for ' to bearer.' The evidence, therefore, on the face of the bill, predominates in favor of its being a bank transaction. Applying then the plaintiff's own principle to the case, and the restriction as to the production of parol or extrinsic evidence could have been only applicable to himself. But it is enough for the purposes of the defendant to establish that there existed on the face of the paper circumstances from which it might reasonably be inferred that it was either one or the other. In that case it became indispensable to resort to extrinsic evidence to remove the doubt. The evidence resorted to, for this purpose, was the most obvious and reasonable possible ; viz., that this was the appropriate form of an official check ; that it was, in fact, cut out of the official check-book of the bank, and noted on the margin ; that the money was drawn in behalf of, and applied OP OFFICERS AND AGENTS. 173 to the use of, the Mechanics' Bank, and by all the banks and all the officers of the banks through which it passed was recognized as an official transaction. It is true it was in evidence that this check was credited to Paton's own account on the books of his bank. But it was done by his own order, and with the evidence before their eyes that it was officially drawn. This would never have been sanctioned by the directors unless for reasons which they best understood, and on account of debits which they only could explain. " It is by no means true, as was contended in argument, that the acts of agents derive their validity from professing on the face of them to have been done in the exercise of their agency. In the more solemn exercise of derivative powers, as applied to the execution of instruments known to the common law, rules of form have been prescribed. But in the diversi- fied exercise of the duties of a general agent the liability of the principal depends upon the facts ; that the act was done in the exercise and within the limits of the power delegated. These facts are necessarily inquirable into by a court and jury ; and this inquiry is not confined to written instruments (to which alone the principle contended for could apply), but to any act with or without writing within the scope of the power or confidence reposed in the agent ; as, for instance, in the case of money credited in the books of a teller, or proved to have been deposited with him, though he omits to credit it." It is very clear that the indorsement of the name alone of the cashier will not leave upon the face of the instrument, re- garded as a contract of indorsement, any marks even possibly indicative of an official or corporate character, so that the facts of such an indorsement could not resemble very closely the material facts in this case, wherein the judge expressly says that the very form of the document raised, and failed satisfac- torily to decide, the question of its private or corporate nature ; wherefore extrinsic evidence could be introduced to explain it. But if it should be considered for this reason to be clear that this case cannot be regarded as a precedent directly in force to sustain the indorsement of the cashier's name as the indorse- ment of the bank, yet it is at least equally clear that this view 174 POWERS, DUTIES, AND LIABILITIES would be fully authorized and maintained by, the general prin- ciple enunciated in the last-quoted paragraph. In this absence of any precedent which we can regard as conclusive, and with two judicial enunciations, each of high authority, and pointing in opposite directions, no other course is open than to set the question down as admitting a doubt and awaiting a settlement. The law concerning the manner in which a cashier may sign checks intended to be officially drawn against deposits or funds standing in other banks to the credit of his own bank, is con- tained in the foregoing opinion almost as in a nutshell. Any form of check whatsoever, and any form of signature, provided the instrument bears anywhere upon its face any indication of a corporate character, will suffice to open the door for the in- troduction of testimony to prove that in fact the character was corporate. It cannot be doubted that proof that the check was drawn and signed in the manner in which the cashier was uni- formly wont to draw and sign when he intended to- draw on behalf of his bank, and which the drawee bank was wont to pay, without objection from the cashier's bank, out of its cor- porate credit, would always be regarded as prima facie and by most juries as conclusive evidence of the corporate char- acter, and would, wherever the interests of justice required it, be held to estop the cashier's bank from denying this charac- ter. Whence it follows that a check in any form customarily used by the cashier in drawing checks on behalf of his bank, would be sustained at law as the check of the bank, however little in accordance with old-fashioned rules might be the agent's method of signing on behalf of his principal. Diffi- culty could only arise where the cashier had a private account at the same bank. In such case, if he should draw upon it a check purporting upon its face to be his individual check, clearly the drawee bank would not be justified in paying it from the corporate deposit. Countersigning, as for example of the bills and notes of the bank intended for circulation, may unquestionably be properly done by the cashier in the third form. If the marks of an of- ficial character, in whatsoever shape they may be, predominate upon the instrument, as they must upon these bills or notes, OF OFFICERS AND AGENTS, 175 they are sufficient notice to third parties. Especially if the word " countersigned " be written or engraved in connection with such signature, it will be enough.^ A cashier cannot, virtute officii, release a surety upon a note held by the bank, even though the bank holds other security to which it might resort. Special authority is necessary to justify such release.^ Instruments executed in Form to the Cashier. The converse of those cases in which third parties seek to hold the bank upon the signature of the cashier, is to be found in those cases in which the bank seelfs to hold third parties liable to itself upon instruments running nominally to the cashier. Here the general rule is simple enough. If, in fact, the contemporaneous intent and understanding at the time of entering into the contract or obligation was that it ran from the third person to the bank, or to the cashier on behalf of the bank, or to him in his official character, then the bank is en- titled to the performance and benefit thereof, and may enforce this right at law precisely as if it were corporately named as the party in the transaction instead of only its cashier. That words are added to the name of the cashier, more or less fully descriptive of his office, is a circumstance which is properly adduced in evidence to prove the fact of intent and understand- ing ; and though it cannot perhaps be said that the addition of such words is absolutely conclusive of the corporate character of the transaction, since a cashier might be described as such for purposes of identification, yet it is clearly very strong evi- dence to this effect, and might perhaps, if nothing repugnant appeared in the. rest of the transaction, be regarded as making out a prima facie case of a corporate dealing. Thus a bill or note indorsed over to, or made payable to, " A. B., Cashier," may be sued upon by the bank in its corporate name and capacity, and the defect in the description in failing to name 1 Bank of Utica v. Magher, 18 Johns. 341 ; citing Mechanics' Bank v. Bank of Columbia, 5 Wheat. 334. 2 Merchants' Bank v. Eudolf, 5 Neb. 527 ; Cooheco National Bank v. Haskell, 51 N. H. 116. 176 POWERS, DUTIES, AND LIABILITIES the bank of which he is cashier may be supplied by parol evi- dence of that fact.^ Dealings in BUls of Exchange. The business of dealing in bills of exchange is a department of the general business of banking. It may or may not be undertaken by the corporation, at its own option. If it is un- dertaken, the duty of buying and selling the bills and indors- ing them over to the purchaser is within the ordinary scope of the cashier's office. ^ The presumption of his power to do so must, therefore, be imperative in favor of a third party dealing with him without notice to the contrary. But whether his general charge of this department would give him power to bind the bank by his acceptance of bills of exchange drawn against it is a matter scarcely to be regarded as beyond a ques- tion. The cashier of the Bank of Kentucky was declared, in a State court, not to have this power by virtue of his office.^ In Michigan, however, in ruling that a cashier could not accept bills for accommodation, it was said that 'such an acceptance would be void in the hands of a holder with notice of its char- acter.* Prom this it seems a pretty clear inference that the cashier could accept on behalf of the bank if it were for a bona fide purpose, not being accommodation. It is certain that the cashier , never has authority to bind the bank by any of the numerous species of " accommodation " contracts, which, in one shape and another, are so common in business circles. Where a bill of exchange is indorsed by a cashier, though only for the purpose of transmitting it for collectfon, he be- 1 Stamford Bank v. Ferris, 17 Conn. 259 ; Barney v. Newcomb, 9 Cush. 46 ; Wright V. Boyd, 3 Barb. 523; Johnson v. Catlin, 1 Williams, 87; Erwin v. Branch Bank at Mobile, 14 Ala. 307 ; Baldwin v. Bank of Newbury, 1 Wall. 234. We cannot do better than refer the reader especially to the opinion in the last-named case. It is conclusive of the whole question; and its array and dis- cussion of the authorities is exhaustive. 2 Lafayette Bank v. State Bank, 4 McLean, 208 ; Eobb v. Ross County Bank, 41 Barb. 686 ; Marvine v. Hymers, 2 Kern. 223 ; Wild v. Bank of Passama- quoddy, 3 Mason, 505 ; Tleckner v. Bank of United States, 8 Wheat. 360. 8 Pendleton v. Bank of Kentucky, 1 T. B. Monr. 179. ^ Farmers' & Mechanics' Bank v. Troy City Bank, 1 Dougl. 467. OF OFFICERS AND AGENTS. 177 comes a " party " to it in the sense of a statute which makes a notarial certificate of notice of presentment and non-payment to "parties" admissible as evidence of such notice ; the certifi- cate is evidence of notice having been given to the cashier, and therefore to the bank, since the subject-matter falls within the scope of his agency.-' The Correspondence of the Bank. The cashier has charge of the correspondence of the bank. Letters on corporate business are properly addressed to him, and whatever statements or information are contained in them will, in law, affect the bank with notice. If the subject written about is one in which he has no autliority to act, or no duty to perform, it is nevertheless his duty to communicate the contents of the letter to the ofiScials within whose province the object-matter'falls; It is his duty to see that the information contained in the letter is promptly laid before the proper per- son. A cashiei has no power to contract for the bank, but if the negotiations concerning a proposed contract are conducted by letters he properly writes and receives these, and the assent of the third party to the propositions of the bank, expressed by him in a letter written to the cashier, affects the bank and completes the legal contract.^ Transfer of Shares. The cashier properly makes or superintends the transfer of shares. Any person showing prima facie a legal right to demand a transfer to liimself, may demand it from the cashier, or from any other principal officer left in general charge and superin- tendence of the business of the banking house. Any officer who can properly make the transfer at all will be protected in making it, without going behind the apparent legality and pro- priety of the demandant's right in order to determine whether 1 Bank of United States v. Davis, 2 Hill, 451. 2 New Hope & Delaware Bridge Co. v. Phoenix Bank, 3 Comst. 166 ; Branch Bank v. Steele, 10 Ala. 916. 12 178 POWERS, DUTIES, AND LIABILITIES or not there is any hidden cause for objecting to it.^ A prima facie title is enough. As, if one who has bought shares sold by the State assessor for taxes asks for a certificate for them, the cashier is not only justified in giving it, but it is even his duty to do so, and the bank cannot subsequently be held liable on the ground of any original irregularity which should have alto- gether prevented the making of the sale. Selection of Depositors. The cashier is the proper officer to accept or refuse the ac- count of one who wishes to become a depositor in the bank.^ This of course is the case only in the absence of action by the directors in the premises. The decision of the cashier could at any time be overruled by them if they should see fit. Of Extraordinary Acts and Special Powers and Duties. At this point closes the list of the powers and duties which the cashier may exercise simply by virtue of his office, and within the scope of which he may bind the bank by reason of his being held out to the world as cashier, and as entitled to fulfil all the ordinary and inherent functions of that office. Outside these limits, however, there are great numbers of acts which are frequently undertaken by cashiers, which are strictly con- sistent with the nature of their office, and which are properly allotted to them for performance. Within this wide classifica- tion may be included every thing of an executive character, and many matters partially discretionary, or discretionary within certain limits, so that in delegating power over them the di- rectors do not, in fact, part with any governmental authority or divest themselves of the performance of any inalienable duty. That corporate agents, especially agents having such large and important general powers as are enjoyed by bank cashiers, should be allowed some degree of latitude of discretion is in- 1 Smith V. Northampton Bank, 4 Cush. 1 ; Commercial Bank of Buffalo v. Kortright, 22 Wend. 348. 2 Thatclier v. Bank of State of New York, 5 Sandf. 121. OP OFFICERS AND AGENTS. 179 evitable, and, within reasonable limits, is desirable.^ But the power to exercise discretion, except in comparatively unimpor- tant matters of routine, should be distinctly conferred by the directors or very clearly proved by custom. Even if it be thus conferred or proved, it will be upheld only upon the condition that it is not a material encroachment or usurpation upon the governmental province. It has already been seen that of their obligations and responsibilities of this high nature the directors cannot strip themselves if they would. They are entitled to abdicate only by means of a direct and formal resignation". But if the act which the cashier assumes to perform is one intrinsically perfectly proper to be committed to his charge, the law will presume in favor of a third party dealing with him that he was duly authorized to perform it. The presumption is not conclusive, and may be rebutted. The third party simply makes out a prima fade case, which the bank may destroy by showing that neither a directorial resolution nor any usage had justified the cashier in his assumption of power.^ In fact, the third party relies upon the character of the cashier, and trusts that that officer, doing an act which he may fairly be supposed to be enabled to do, is in truth acting regularly and under authority of some sufficient description. If he is deceived in this his trust, it can only be said that he voluntarily ran a risk in rely- ing solely on the cashier's assumption, and that he must suffer the consequences of having neglected to assure himself from more accurate sources. The tendency of the courts is always, where an innocent party has been deceived by a cashier, to sus- tain the favorable presumption of the law, if it can be done ; but they cannot disregard or overrule positive proof against it. Power may be conferred upon the cashier by a resolution, 1 Stamford Bank v. Benedict, 15 Conn. 437. 2 State V. Commercial Banls, 6 Sm. & M. 218 ; Commercial Bank of Buffalo, V. Kortright, 22 Wend. 348 ; Lovett v. Steam Saw Mill Association, 6 Paige, 54 ; Payne v. Commercial Bank, 6 Sm. & M. 24; Bank of Vergennes v. Warren, 7 Hill, 91 ; Harper v. Calhoun, 7 How. (Miss.) 203 ; Farrar v. Oilman, 1 App. 440. In fact, it may be said tliat a very large proportion of all the cases cited in dis- cussing the powers and duties of cashiers indirectly support this point. Regu- larity and legality are always assumed. 180 POWERS, DUTIES, AND LIABILITIES general in its terms, and not requiring to be repeated when each specific occasion for the exercise of the power comes up.^ But proof that no resolution was ever passed by the board in the premises does not suffice to rebut the presumption afore- said. This is only one of the props on which it is assumed to rest. Verbal directions from the board are amply sufficient. Usage and tacit approval still remain as possible or probable supports.^ All these must be negatively disproved before the burden is shifted upon the shoulders of the innocent dealer or contractor.^ Neither need the usage be specific in its character and confined to acts of precisely the same description as the one in question. If the directors have for many years allowed the cashier to do, without interference, all the business of the bank, they are held thereby to have conferred upon him author- ity to do any thing and every thing on the corporate behalf which the charter or law does not absolutely prohibit and for- bid a cashier to do, and so render illegal under all circum- stances. If the cashier has a power so wide and liberal as this, it is needless to prove an usage to do any particular act which he may have undertaken. If the act does not fall within the limits of unavoidable and inherent illegality, it is valid and binds the bank, though a precisely similar act may never before have been undertaken by the cashier since the creation of the institution.* This doctrine is certainly a liberal one towards innocent outsiders. One case, and only one case, appears to have gone farther. In Pennsylvania,^ the court were discuss- ing the power of the cashier in relation to the collection of dqbts owing to the bank. They declared that he had power to compromise, — a ruling which has been already discussed, and which certainly was going pretty far. They then laid down this remarkable position, that in particular cases his authority may be extended by the nature of his agency and by implica- 1 Elwell u. Dodge, 33 Barb. 336 ; Howland v. Myer, 3 Comst. 290 ; Gillett v. Campbell, 1 Den. 520 ; Bank of Vergennes v. Warren, 7 Hill, 91. 2 Caldwell v. National Mohawk Valley Bank, 64 Barb. 338. " Bank of Vergennes v. Warren, 7 Hill, 91 ; Stamford Bank o. Benedict, 15 Conn. 437. * City Bank v. Perkins, 4 Bosw. 420 ; 29 N. Y. 554. ' Bank of Pennsylvania v. Reed, 1 Watts & S. 101. OP OFFICERS AND AGENTS. 181 tioti arising therefrom, according to the pressure of circum- stances in the business in hand ; and, in reference to the facts under consideration, they were of opinion that the " necessity " of doing the act conferred upon the cashier the power to do it, which otherwise he would not have possessed. There is cer- tainly sound reason, and probably sound law, in the doctrine that stringent necessity growing out of the unmistakable inter- ests of the bank may sometimes justify a cashier in doing on its behalf some act which, in the absence of the emergency, he could not properly do ; provided — and it is an essential pro- viso — the act be strictly consistent with " the nature of his agency." If the language of the court is to be construed as ad- vancing only the principle that extraordinary cases may arise in which the courts will sustain the cashier in an act dictated by an obvious and imperative necessity, which he could legally perform under the authority of a usage or a directorial vote, and which, it must be presumed, the directors would unques- tionably have authorized him to perform had they had warning of the need, and therefore had opportunity to act, — if this is what is intended, the doctrine is in the interest of justice and common-sense, and may well be adopted into the body of legal principles. But if the theory was advanced that whatever seems necessary, in the liberal interpretation of that flexible word, to be done, may be legally done by a cashier simply by virtue of that necessity, that the power grows out of the cir- cumstances of the particular case, it is bad in law and mis- chievous in fact. No decision of any other bench, no language of any other judge, recognizes the existence of any such shift- ing and utterly indefinite test of the powers of a cashier. To admit it would simply be to introduce complete uncertainty and to encourage litigation. Pew men would abandon without an effort the chance of persuading a jurj'^ that it was in fact quite " necessary " for the cashier to deal as in fact he had dealt. Of Limitations of Time and Place upon the Cashier's Powers. The place where and the time when a cashier is called upon to do, or undertakes to do, acts on behalf of the bank are often 182 POWKES, DUTIES, AND LIABILITIES circumstances materially affecting his powers in the premises. For some purposes he is cloaked with his official character only at the banking house and in banking hours ; for other purposes he remains cloaked with it at all times and places. No better rule for discriminating between these two classes presents itself than to say, that, as there are some acts which can only be properly performed at the office of the corporation and during the hours ordinarily devoted to public business, so there are other matters which may be transacted equally well at all times and places. The distinction is a purely practical one, arising from the intrinsic character of the transaction itself regarded from a business point of view. A test, which is perhaps as accurate as any that could be suggested, is furnished by the question whether for the due performance of the business there are requisite any. knowledge or appliances which can only be satisfactorily and fully possessed by the cashier when he is at the banking rooms. It is easy to point this rule with examples which will be serviceable in illustrating its precise significance. Thus, it cannot be pretended that any sound reason could restrict the power of the cashier to draw checks to a power to draw and sign them only in the office of his own bank and in the ordinary business hours. Even prudence might sometimes induce him to draw them elsewhere, as at the rooms of the drawee bank, to avoid danger of loss or fraud. So, if any per- son wishes to impart information so as to warn the bank or to affect it with notice, it would be absurd to say that he could do so effectually only if he should make his communication to the cashier actually within the walls of the banking house, and before it was closed to the public for the day. There would be no reason in such restrictions, and there is no law in their support. But if information be sought from the cashier, it should be sought at the banking rooms, where he can have access to the books, papers, and records.^ But, on the other hand, it is obvious that a cashier ought not to make a payment upon, or to certify or accept, a check or draft when he is away from the bank. He may have been absent from the bank but very few minutes, and it may be 1 Merchants' Bank v. Rudolf, 5 Neb. 527. OP OFFICERS AND AGENTS. Isd that the check, if presented when he left, would have been properly paid or certified or accepted. Still, even in that short interval, the drawer's account may have undergone so material a change by reason of payments made or drafts ac- cepted on his account, or perhaps by force of garnishee process served upon his funds in the bank, that his checks could no longer be honored. In that case the payment, certification, or acceptance having been wrongfully made by the cashier, would become his own individual loss, and he would be obliged to reimburse the amount to the bank, if the bank should see fit to accept and ratify instead of repudiating the proceeding. Clearly the same must also be the case if later in actual time than the payment, certification, or acceptance by the cashier, but still prior to his return to the bank and entering or noting the transaction to the debit of the drawer, or informing the proper officers of its having been made, any other disposition had been legally made of, or any other valid lien had attached upon, the drawer's funds or credit. Otherwise a loss would be inflicted upon the bank solely and wholly by reason of improper conduct on the part of its officer. In fact, it may fairly be argued that in the supposed case of the payment made in this manner the cashier practically renders himself the agent of the drawer for the presentment and collection of the check, and in expectation that when he can arrive at the bank and present it there will be no obstacle to its full pay- ment, he ventures to advance upon it to the drawer its full face value. The risk of intermediate transactions diminishing or destroying the security is his own private risk ; the loss if any is his own private loss. The same reasons might make the certification or acceptance binding against him personally. His acceptance thus made on behalf of the bank can be repu- diated absolutely by the bank, if events transpiring before his return to the office and entry or report of the transaction would render the making of the acceptance at the time of the return and entry or report improper. This would at least be the case so long as the acceptance remained in the hands of the party obtaining it, or of any other party having notice of the circumstances attendant upon its making, for these persons 184 POWERS, DUTIES, AND LIABILITIES would be affected with a presumed knowledge of the rule of law rendering this undertaking of the cashier irregular.^ But since the instrument would probably be perfectly regular on its face as the acceptance of the bank, and would in fact have been executed and issued solely through the improper exercise of a power really lodged in the officer of the bank, it is probable that a bona fide holder for value and without notice would be allowed to enforce it against the corporation. Whether the bank could be held by the acceptance, if the cashier on his return failed to report it, the drawer having then funds enough, is a difficult question. It cannot be said that in making the acceptance, as in making the payment, the cashier assumed a position in any degree resembling that of an agent for the liolder. On the contrary his act assumed to be and could be, throughout, only purely official. Upon his return to the bank it was his duty to report it and have it duly entered. This must perhaps be regarded as his official duty. Accordingly it may be argued that his neglect of it would leave the bank still bound to the third party, though entitled to hold the cashier liable to make good any damage to itself. On the other hand this position can be assailed by urging that the transaction was from the outset void as an undertaking of the bank, or, if not actually void, yet so far irregular and invalid as against the bank that it can be made good against it only by a thorough re-performance in full of all essential acts. The party dealing with the cashier may well be held to take the risk of the cashier's faithful conduct in these particulars ; which upon the other hand the bank cannot possibly be regarded as warranting, since the whole proceeding, ab initio, was directly in contravention of the principles of the agency which it had established. An interesting and important question, similar but not quite identical, is raised where the cashier receives payments of money for credit on an ordinary deposit account, when he is away from the bank. This limitation is annexed to the simple word payment, because perhaps the case of receiving payment 1 Bullard a. Randall, 1 Gray, 605. The opinion in this case was delivered by Chief Justice Shaw, and has always been relied upon as a thoroughly satis- factory and conclusive authority. OP OFFICERS AND AGENTS.' 185 of a debt due to the bank might be different. In many cases the law requires the creditor to make demand upon his debtor. And unquestionably a cashier may follow up a delinquent or doubtful debtor of the bank and exact payment from him at any time and place when and where he may be able to do so. But where money is offered for credit on a deposit account it is clear that it should not be accepted away from the bank. The bank does not contemplate any such method of receiving de- posits, but has provided an entirely different system. Clearly, therefore, it does not empower its cashier thus to receive them. He cannot bring them instantly to account in the bank, nor secure them with the safeguards always provided in banks for the preservation of their funds. But if he does so receive them, and then loses or misapplies them before he has actually transferred them into the corporate possession, the question arises, can the payer hold the bank to make good the amount? Clearly, we say, he cannot. Even though the cashier may have had the identical money in his pocket at and after the time of his return to the bank, nothing short of his actual transfer over and bringing it to account in the bank can make the bank liable. The transaction, even in this form, differs materially from the case of an acceptance or certification previously supposed. In that case the cashier was acting strictly as an agent of the bank. He could possibly do the act in no other capacity. Whereas in taking the money it must be held that he was acting as agent for the party paying it ; the trust and object of his agency being that he should make the payment into the bank to the credit of the payer's deposit account. He was the agent of the payer for this pur- pose, selected as a convenient agent because he was also an agent of the bank. The money was paid to him doubtless because he was cashier, but it was not paid to him as cashier. The latter character could not be given to the transaction, even if both parties sought to do so ; for they must both be affected with knowledge of the rule of law which rendered a payment made under such circumstances irregular and improper, and so invalid as against the bank. It is fair then to say that in no part of the transaction can it be admitted that the cashier 186 POWERS, DUTIES, AND LIABILITIES was acting officially, even though irregularly so. His act should be regarded, not as irregularly official, but as abso. lutely unofficial. Therefore the obligation which he owed to pay the money into the bank ran to the party paying it to him for that purpose, not to the bank ; his breach of it would make him liable to that party, not to the bank ; the loss arising from the breach must be borne by that party, who was in fact his principal in the agency, not by the bank, which was known to all concerned to have strictly excluded any such function from the scope of his official agency. The three Instances adduced differ very considerably in the force of the arguments which can be brought to make them respectively acts upon which a liability of the bank can be based. But it seems that in all alike the non-liability of the bank is undeniable. Though the cashier ought on his return to the bank to report the acceptance he has made on its behalf, or to pay over the money he has received on its behalf, and though, if he should then promptly report and enter the accept- ance, the drawer's account might make it good ; or though he may have the identical funds paid over to him still in his pocket ; yet in both cases it is clear that the person dealing with him knew, or was at law bound to know, that the dealing was, under the circumstances, irregular, improper, and beyond the scope of the cashier's agency. The transaction might be capa- ble of being made right in the future when the cashier should return to the bank. But until that time, and until, as a matter of strict fact, it had actually been so made right, it must be invalid as against the bank. That it should not be made right at all is a chance which may come to pass, either through the mistake, the negligence, the innocent loss, or the fraud of the cashier. Now clearly the third party takes the chance of the mistake or the loss, and why not equally of the negligence and the fraud. He trusts that every thing will go right, that the eashier will be careful and honest. But Jhe sufficiency of both the care and the honesty is his own risk ; for he has con- fided in them of his own independent motion, not under the invitation or holding out of the bank, but in fact with the express knowledge, either actual or conclusively inferred at OP OFFICERS AND AGENTS. 187 law, that the bank warrants neither when they are relied upon under such circumstances. The decision in Pendleton v. The Bank of Kentucky ^ does not at all interfere with the above doctrine. The court certainly remark in that case that the cashier holds his office at every time and place. But the point of view from which they make that remark explains its intended significance. They were dis- cussing the question of whether the cashier's conversion of money improperly received by him when away from the bank was a default which would sustain a suit upon his official bond, and it was in the course of declaring that it would that they made the above remark. It cannot be questioned that, if the bank lias waived the irregularity, and adopted or ratified the improper act, if it has fulfilled the obligation which its agent attempted to impose upon it, it has done simply what it had a right to do, and what neither the officer noi* his sureties can object to. There is nothing originally void about the act, noth- ing which prevents the bank from subsequently accepting and ratifying it. It is unauthorized and therefore voidable, but it is no more than this. On the other hand, if the bank exer- cises its privilege of repudiating the transaction, the right of action against its cashier cannot accrue to it, for it cannot be allowed to take the two inconsistent positions of repudiating the responsibility, and yet claiming damages for a loss which it could only suffer if it were responsible. Where a cashier had wrongfully indorsed a note " G. B. Cas.," and inquiry was made from him at a distance from the bank concerning the note, and he replied that it was " all right," the court said that the force and effect of this state- ment, as against the bank, were nowise affected by the consid- eration of the place where the conversation took place .^ The element of place was evidently, under the' especial circum- stances, of no consequence whatsoever. An inquiry and reply as to any other note, where the cashier might be supposed to speak from memory and without access to the books, papers, ' 1 T. B. Monr. 171. 2 Houghton V. First National Bank of Elkhorn, 26 Wis. 663. 188 POWERS, DUTIES, AND LIABILITIES and memoranda of the bank, might not improbably be differ- ently regarded. The Cashier's Declarations or Admissions. The cashier can bind the bank by his declarations or admis- sions only when his power to do so is a direct and necessary implication from the other powers confided to him by the bank. His authority to declare or admit is strictly incidental, never original. When, however, the statements satisfy these require- ments, they may be given in evidence for or against the bank with the like effect as the authorized admissions or declara- tions of any other agent may be given for or against his prin- cipal ; and they will be conclusive or open to explanation or to rebuttal according to the same general rules. It is likewise necessary not only that, so far as the intrinsic nature of the admission or declaration is concerned, the casliier might bind the bank by it, but also that he should make it officially, and with the expressed or obvious intent actually to bind the bank by it. Thus he may bind the bank by statements officially made in relation to the sale of bills of exchange or drafts ; ' the business of selling and negotiating them being within his province. His declaration that stock pledged with the bank is held in trust for a third person may be given in evidence against the bank to prove notice of the trust ; '■^ it being his duty to take charge of all the property belonging or pledged to the bank, to know by what title and in what capacity the bank holds the various items, and to keep them duly ear-marked. On the other hand it can never be pretended that he has any incidental powers to bind the bank by declarations or ad- missions which are made beyond the scope of his duties. Thus his statement or promise given to a person who is about to put his name as indorser upon a note which the bank has agreed to discount, to the effect that such person will not be held lia- ble, or shall not be looked to by the bank, is altogether inop- erative and void as an undertaking of the bank. For so far 1 Sturges V. Bank of Circleville, 11 Ohio St. 153. 2 Harrisburg Bank v. Tyler, 8 Watts & S. 373. OP 0PPICBE8 AND AGENTS. 189 as the business of discounting is concerned, the cashier's sole power and function is to pay over the money upon the dis- counted notes. Collateral contracts or agreenaents of any nature are altogether beyond the range of his employment. Declarations or admissions in the nature of such contracts are equally beyond his province, and consequently equally value- less with the contracts themselves.^ Payment made by the cashier upon a check bearing the forged name of a depositor, or by way of redeeming bills or notes falsely purporting to be those of the bank, is the pay- ment of the bank. It is an act within the scope of the cashier's authority, and cannot subsequently be either recalled or repu- diated. He is intrusted by the bank with the duty of deciding upon the genuineness of such paper when it is presented for payment or redemption. But if such paper is shown to him, not for the purpose of demanding payment thereon, but simply to inquire whether or not it be genuine, his erroneous answer that it is so will not bind the bank as an admission. For it is not his function to give such information. The bank does not intend that he should do so, or hold him out as competent to do so. When payment is demanded,it is an inevitable necessity that some oflBcer should decide whether or not the paper is what it purports to be, and this necessity the bank can in no way avoid, without destroying the possibility of banking business. But to answer all questions which may be put concerning the genuineness of the paper is quite another thing. The same necessity does not exist for this, and the bank is accordingly presumed to refuse altogether to assume gratuitously a task of such dangerous responsibility. Therefore, if the cashier under- takes to answer such interrogatories, his act is wholly beyond the scope of any authority given him by the bank, and ought to be known by all persons to be'so. The declaration is im- potent to conclude the bank. Practically if it were allowed binding force it would amount to allowing the cashier to give a valid promise on behalf of the bank to pay what the bank ' Bank of the Metropolis v. Jones, 8 Pet. 12 ; Bank of the United States v. Dunn, 6 id. 51 ; Harrisburg Bank ;;. Tyler, 3 Watts & S. 373 ; Merchants' Bank V. Marine Bank, 3 Gill, 96. 190 POWERS, DUTIES, AND LIABILITIES does not in fact owe ; a power which even the directors could rightfully exercise only in extraordinary cases if ever. The difference between a payment actually made, though by mis- take, and an executory agreement to pay, or acknowledgment of the sufficiency of the order calling for payment, made under the same mistake, is certainly wide enough to admit of this corresponding difference in the respective validity of the two acts.^ In the case of the Franklin Bank v. Stewart,^ an interesting point in this subject is discussed, which cannot be better eluci- dated than by presenting a brief summary of the remarks of the court. Statements, it was said, concerning a past transac- tion are given purely as a matter of courtesy. No one has a legal right to demand them. Consequently a cashier in mak- ing them does not make them in an official character, or as an agent of the bank authorized to bind it by them. The most that can be said is that the bank does not forbid him to do an act of ordinary courtesy ; but it is equally far from empower- ing him to impress upon that act any other and more serious character. In Bank of Monroe v. Field,* admissions as to the fact of payment having been made upon a note, were held ad- missible as constituting a part of the res gestce, but upon the express ground that they were shown to have been made upon, and as the result of, a contemporaneous examination of the books of the bank undertaken for this very purpose. But if the statement, though it concern a past transaction, is con- nected with a present dealing, the reason of the rule fails, and the rule itself shifts to the opposite doctrine. The test is well given in the following remark of Sir William Grant, in the cause of Fairlie v. Hastings.* Unless the agent's statements constitute the actual agreement of the principal, or are the foundation of, or inducement to, that agreement, they are mere naked assertions, not proofs, of the fact; and being such they 1 Bank of the United States v. Bank of Georgia, 10 Wheat. 333 ; Salem Bank V. Gloucester Bank, 17 Mass. 1 ; Merchants' Bank v. Marine Bank, 3 Gill, 96 ; Farmers' & Mechanics' Bank v. Troy City Bank, 1 Dougl. 457. 2 37 Me. 519. a 2 Hill, 445. * 10 Ves. 123. To the same point, see Lime Rock Bank v. Hewett, 52 Me- 631. OF OFFICERS AND AGENTS. 191 amount to nothing. The facts of Franklin Bank v. Stewart were these : A messenger was sent to the bank to inquire whether a certain note had been paid. He did not tell the cashier that he was asking on behalf of any party to the note ; it did not appear that the cashier examined the file of notes, or any of the books of the bank. But he answered that it had been paid. In truth it had never been paid, and at that moment still lay among the uncancelled notes of the bank. Upon the strength of the principles above propounded, the court held that the bank was not bound by this statement of its cashier, and this even though it was shown that a surety on the note, relying on that statement, had given up security which he held from the principal promisor. The surety had taken imperfect means to acquire the knowledge he desired, and his loss was only a natural result of his insufficient thoroughness in the transaction. The opinion delivered by Shepley, C. J., is learned and able, and the cause deserves to be deemed a leading one, even in spite of the fact that two members of the bench found reasons for dissenting from the decision of their comrades. In a recent case in Nebraska it has been held that where a surety on a note is erroneously told by the cashier at the bank that the note has been paid, and upon the strength of this statement becomes surety upon another note of the same maker, the bank will not be able to recover on this second note. It does not appear in this case that the cashier knew the precise object with which the inquiries were made ; but he obviously had reason to suppose that they were made alto- gether idly, or without purpose.^ Implications and Inferences arising from Acts of the Cashier. The bank is bound by all the legal implications or inferences which must, as matter of law, grow out of those acts of the cashier, which he does in the prosecution of any of the func- tions included in his agency. Indirectly these acts often closely resemble declarations or admissions. But they may bind where ' Merchants' Bank v. Eudolf, 5 Neb. 527. 192 POWERS, DUTIES, AND LIABILITIES a declaration or admission might not bind, as has been already seen in the cases of forged paper used in illustration above. He has power to collect and to give receipts for the sums col- lected, in behalf of the bank ; he has power to make, or to direct his subordinates to make, the entries in the books of the bank. These receipts and entries are admissible in evidence as the acts of the bank itself, and if the mere making them, or the peculiar form of expression used in them, have any tech- nical legal force or efiFect, the bank will be concluded thereby as by the necessary legal sequence of its own doings. In Badger v. The Bank of Cumberland,^ a suit was brought to hold the defendant corporation as owner of a one-third interest in a vessel. It appeared that a debtor of the bank originally owning this one-third had bonded it to the bank to secure his debt ; that afterward he had stated himself unable to pay, and had abandoned his interest to the bank ; that thereafter an ac- count had been settled between the owner of the remaining two-thirds, being also the ship's husband, and the cashier of the bank ; that the cashier, acting in his official capacity, had thereupon receipted for what appeared by the account to be the bank's proportion of the net earnings ; that the president had requested the rendering of the account, and had insured one-third of the vessel's value for the benefit of the bank. It was held that the cashier's receipt and his entry of the trans- action on the books were acts within the scope of his agency, and that their legal effect and significance, as proof of part ownership by the bank, could not be controverted by the bank. Also that the items of his entries in the books were conclusive proof of an adoption and recognition by the corporation of the president's acts in effecting the insurance. Liability of the Cashier to the Bauk. The cashier is, of course, liable to the bank, in an action of damages to make good any and all injury arising from his fraudulent or wrongful acts of an official nature, from his un- authorized assumption of power, or from his breach of the 1 26 He. 428. OP OFFICERS AND AGENTS. 193 directions imposed upon him to govern his conduct in his agency.^ How far he is responsible for innocent errors and mistakes will be considered under the topic of" Official Bonds." The tellers, book-keepers, &c., are his subordinates and sub- agents. But he is not answerable, like an ordinary principal, for their defaults, whether intentional or innocent, unless per- haps in those cases in which it can be shown satisfactorily that the default was occasioned, or opportunity or temptation thereto was furnished, by his improper or negligent performance of his duty of general superintendence. This rule is supported by the necessity of the business. It is impossible for him to be omnipresent and omniscient among all his servants in the insti- tution, and he is not liable for his failure to perform this im- possibility. He is required only to direct them properly in the performance of their several functions, and to exercise the most thorough supervision which is practicable in view of the amount of daily business and the method of conducting the routine of daily affairs. The sub-officers and their respective provinces are usually well known. But if the duties which are ordinarily done solely by the cashier become too onerous to be executed by one man, any arrangement for a partial sub-delegation, which circumstances authorize the cashier in assuming to be satisfactory to and ratified by the directors, will be valid and will thereafter save the cashier from liability for frauds or errors committed in the delegated department.'* Besides the right to a suit in damages which grows out of a cashier's malversation in office, specific statutory penalties are often afiixed to specific acts of wrong-doing. Whether the bank by suing to enforce the penalty deprives itself of the right also to sue in damages, must be decided by a consideration of the nature of the penalty. It is a fundamental truth that the bank has a right to be reimbursed in money for all its losses directly caused by the wrongful conduct of its agent. If the provisions establishing the penalty make any satisfactory ar- rangement for this reimbursement, then the proceeding for the penalty must be taken as clearly intended to supersede 1 Austin V. Daniels, 4 Den. 299. 2 Bank of the State v. Comegys, 12 Ala. 772. 13 19i POWERS, DUTIES, AND LIABILITIES the proceeding for damages. But if it is not so provided in the statute it must be assumed that it was intended that the two actions might be prosecuted independently of each other. The awarding of the suit for the penalty is akin to authorizing the recovery of vindictive damages, in addition to the simple dam- ages which may still be demanded in the other suit. The only decision of interest occurring under penal statutory provisions is one which declared that a penalty set upon the cashier's conversion of any " money, bank-bill, or note " could not be applied to his conversion either of promissory notes, not being bank-notes, ordinarily so-called and intended for circulation as currency, or of any other species of commercial paper.^ Acts in Contravention of the Charter or Organic Law. It has been said that acts done by the cashier in pursuance of orders given him by the directors may bind the bank, though they are in contravention of the charter, or of the provisions of the organic law, and are therefore acts which in fact the direc- tors have no power to authorize him to do.^ It must be sup- posed, however, that the rather sweeping language used in the opinion in the case cited as authority for this doctrine, is sub- ject to some unexpressed limitations. Thus if the party dealing with the cashier krfows, or must at law be deemed to know, the original deficiency of power in the directors, it cannot be conceived that he should nevertheless be allowed to hold the bank upon that dealing, as if it were in every respect legal. Otherwise the law would be directly aiding him in taking advantage of his own consciously illegal act. It seems rather that dealings of this description put both parties in pari delicto, and so deprive each of the right to demand relief against the other. The respect in which the judiciary of the State of Pennsylvania has always been held, and the apparent fairness of the decision which was rendered in view of the actual facts presented in the cited case, are inducements to confine criticism to the breadth of language used in the opinion rather than to 1 State V. Stimson, 4«Zabr. 9. ^ Hagerstown Bank v. Loudon Savings Fund Soc, 8 Grant, 135. OP OFnCERS AND AGENTS. 195 go the length of wholly denying the fundamental correctness of the precise ruling when stripped of its needless luxuriance of words and illustrations. It would certainly be desirable that the authority of the directors should be sufficient to protect one dealing with the cashier in good faith, and ignorant that some statutory provision rendered the authority given just a little in excess or contravention of the strict law. Yet it is perfectly obvious that the rigid rule is that the third party must be held to a knowledge of the public law, and by consequence to a knowledge of the illegality of the proceeding in which never- theless he is taking part. It has been previously seen that this rule may be infringed upon for the purpose of protecting one who deals with a cashier within the ordinary province of a cashier's office ; though, unknown to him, the charter sets re- strictions upon this particular cashier's powers materially inside of those customary limits. No greater or more unreasonable is the breach in the general principle which is made by this case of the Hagerstown Bank, and we should like to see it sustained in cases where the facts reasonably demand it ; not certainly in all the cases suggested as examples by the fertile imagination of the judge who wrote the opinion, but in cases presenting an obvious equity. Still, standing as it does, an isolated decision, and in addition to that, also open to severe criticism, there is certainly some chance that it may not" be affirmed. The case of the Salem Bank v. The Gloucester Bank^ asserts generally that the bank is not liable for the act of the cashier done under the authority of the directors, if they have no power to confer that authority. The general rule must be admitted to be thus. But in this Massachusetts case no strong equity tempted the court to consider the possibility of admitting a limited exception to the broad principle. Directorial Orders as Justification for Illegal Acts. Whether or not as between himself and the bank the cashier could ever set up orders of the directors in justification or ex- cuse for his performance of acts which they had no legal right 1 17 Mass. 1. 196 POWERS, DUTIES, AND LIABILITIES to authorize him to perform may possibly be open to a slight doubt. Probably, however, he could never be allowed to do so. It would seem that he must be imperatively held to know what it is possible and what it is impossible for him to receive legal authority to do. Certainly if there is any intrinsic illegality or impropriety in the act itself, the cashier cannot plead either the formal vote, the ratification, or the connivance of the gov- ernment of the bank. The directors can by no possibility authorize him to commit a fraud, to misapply funds of the bank, to subject them to improper risks, to make private profits by the use of them. He can by no possibility believe that the directors can thus authorize him. The question is not who is to reap the fruits of the malfeasance. The cashier is respon- sible for obeying an order which he knows to be illegal, and to be given for an immoral purpose, equally whether he is or is not to participate in the illicit gains. The empty semblance of obedience to superiors cannot take away the genuine char- acter of connivance in a wrongful proceeding, and would be "void to protect the cashier in his wrongful compliance."^ In the cited case it was held that the cashier could not be pro- tected from liability to reimburse a loss arising from his having allowed a customer to overdraw, by showing that tha directors had been wont to countenance him in a custom to allow good depositors to overdraw without taking security from them. For here, it was said, the act was intrinsically wrongful. It was a dishonest use of the corporators' funds. Being thus in itself inexcusable, it could not be excused by a mere show of authority. Cashier as a Trustee. It has never been held that the position of the cashier was precisely that of a legal trustee. Yet the qualities of a trust can never be wholly wanting where an agent has committed to him the care and management of the property of other persons for certain definite purposes. To say that he cannot either directly or indirectly use his influence or any of his powers, to 1 Minor v. Mechanics' Bank of Alexandria, 1 Pet. 46 ; Austin v. Daniels, 4 Den. 299. OP OFFICERS AND AGENTS, 197 secure advantages to himself, is only to assert what has never been called in question ; and it makes no difference that his conduct was not, or was not intended to be, hurtful to the bank. If he wishes any species of accommodation from the bank, even though he might have power to grant the same to any other person, he will not be safe in granting it to himself, without express permission from the board of directors. The familiar rule of agency, that one shall not be agent for any other party in a contract in which he is himself interested, or a fortiori in which he is a principal on the other side, suffices to prohibit this. But further than this, in his own dealings with the bank, he is held, like a trustee, to exercise a much greater degree of scrupulosity and thoroughness of regard for the interests of the bank than in the conduct of like dealings had by other people with it. Thus, if he has a loan from it and gives to it his promissory note for the amount, if he does not pay the note promptly upon its maturity, it will not be enough that he treats it precisely in the same manner in which he is wont to treat other unpaid notes belonging to the bank. He has an extraordinary duty to perform in regard to it, and must bring the facts of its being overdue and unpaid distinctly before the directors in their official capacity. If the period of the statute of limitations ha^ elapsed since the date of the note, he will not be allowed to take advantage of it simply because he has left the note in the bundle of unpaid notes, which from time to time was examined by the directors for the purpose of putting in suit such of the notes contained in it as they might see fit. The statute will begin to run only from that date upon which the cashier can establish by affirmative proof his express notification of the whole matter to the directors.! But if the cashier embezzles funds of the bank and invests them, a court of chancery has no power to fasten a trust upon the investment and to declare the cashier to be a trustee, hold- ing what he has purchased in trust for the bank. The mere fact that the cashier obtained the means of purchasing by a ' Harrisburg Bank u. Forster, 8 Watts, 12. See also Conyngham's Appeal, 57 Penn. St. 474. 198 POWERS, DUTIES, AND LIABILITIES theft from the corporate funds, provided that he actually made the purchase in his own name and on his own account, does not create such a case of implied or resulting trust as to give jurisdiction to a court of equity for the purpose of taking pos- session of the purchased property and ordering that indemni- fication be made from it to the bank.^ Nature of the Cashier's Control over the Promissory Notes of the Bank. It has been said that the cashier has charge of all promis- sory notes due to the bank. But though he thus has actual manual possession and control of them, yet he has not that legal possession which will enable him to bring a suit upon them in his own name. His possession is in fact only custody which the court will not recognize as an absolute, but only as a qualified, possession, not carrying with it the presumption of title or the right to sue.^ After the Expiration of the Franchise. Where by the charter itself or act of legislature a bank is continued in existence as a corporation after the lapse or sur- render of its franchise, for a limited time and for the purpose of closing its affairs, the directors may legally appoint a cashier to act during such period. Any irregularity attendant upon the choice or process of qualification of these directors will not affect the validity of the acts of the cashier chosen by them, provided they are de facto directors, assuming to be such under a shadow of title, and acting as such at the time of making the appointment.* Estoppel. A cashier, by performing in his official capacity, acts and duties which are not inconsistent with the nature of his office and functions, may be held to be thereby estopped in a suit ' Paacoag Bank v. Hunt, 3 Edw. Ch. 583. 2 Olcott V. Bathbone, 5 Wend. 490. ^ Cooper v. Curtis, 80 Me. 488". OP OFFICERS AND AGENTS. 199 against himself to deny that their performance was ordered by the board of directors.^ Certification of Checks. We have now to deal with a matter long the subject of un- certainty and dispute, but which some recent decisions of high authority have done much to elucidate and settle. That there is no intrinsic illegality in the naked act of certification must be regarded as beyond the possibility of doubt. The nature of a certified check, assuming the certification itself to be valid, is fully explained in the chapter on Checks. In legal effect it is a contract of acceptance on the part of the bank, by which the bank undertakes and becomes absolutely bound as an original promisor to pay the amount named, according to the orders written in the instrument. We have here to deal with the powers and duties of the various bank officers concerning this transaction. So soon as a check has been certified, the amount should at once be debited to the drawer and credited to the payee, or, as is sometimes preferred, to a " certified check account," upon the books of the bank. The payee thereafter occupies in several respects, as for example the running of the statute of limitations, the position of an ordi- nary depositor. Though of course he cannot insist upon the right to continue a deposit account if the bank does not wish to open it; neither can he draw checks against his credit, which is properly only to be paid over upon presentment and surrender of the accepted check. He is an ordinary contract creditor for the amount. The duty to make this entry is what might be described as a purely internal duty. It is a part of the mechanism oC the institution itself. The neglect of the officials to do it may render them personally liable to the bank for any consequent loss, but does not affijct the rights of any outside party. For the substance of the doctrines thus far laid down we have the direct authority of the Girard Bank v. Bank of Penn Township,^ a case in which the object of the ' Durkin v. Exchange Bank, 2 P. & H. 277. 2 39 Penn. St. 92. 200 POWERS, DUTIES, AND LIABILITIES court seemed to be to refrain so far as possible from saying any thing useful. Also we have the indirect authority of all the New York cases, which tacitly assume the inherent legality of certification as the necessary basis of all their decisions (^post, p. 203). The most common form in which to express the certification is by simply writing upon the check the word " good " followed by the initials of the certifying officer. But it is not essential that this form should be observed. Any other writing, as the name or initials of the officer, or the word " good " alone, if intended and understood to bear this meaning, will be con- strued accordingly. In England the " marked checks " which in some respects, though not in all, resembled our certified checks, were customarily, until the statute interfered, literally only marked, and bore no written word whatsoever. It makes no difference how meaningless in itself may be the method resorted to, or even that like the word " good " it might seem easily capable of a different meaning ; it will be construed in reference to the customs and usages of the business and to the understanding of the parties, and will be held valid or invalid solely in reference to this construction. It is a certification if it be done animo certificandi, if we may be allowed to coin the phrase. Earely the president undertakes to certify checks ; quite frequently the teller ; but perhaps by far the most frequently the cashier.^ By reason of this proportion it has always been assumed that if the power be inherent in any office it is in- herent in that of the cashier. But here has been a grand question and doubt in this whole subject. Is it, or is it not, an implied power of the cashier; a power which is to be assumed as constituting by custom one of the essential ele- ments of his office and position, which it is to be taken for granted that he can exercise simply by virtue of the fact of his being cashier ? Or, from another point of view : Will his certification of a check bind the bank in favor of an innocent holder who had no actual notice that the bank had never clothed him with any such authority, nor intended that he should exercise it ? 1 Barnes v. Ontario Bank, 19 N. T. 152. , OF OFFICERS AND AGENTS. 201 The well-known case of Mussey v. The Eagle Bank,^ is the strongest authority against the inherent power. That case, it is true, passes directly only upon the power of the teller, but the line of argument is general enough to include also the cashier or the president. An effort was made to prove an usage for the teller to certify. But the evidence was declared wholly incompetent to sustain the usage, and the court went on to say that the usage, even if proved, would not have sus- tained the theory that the power was " inherent." For it would be an usage to allow the teller to pledge the bank's credit, a power which by the constitution of the bank can be exercised only by the corporate government or under their special dele- gation, and consequently cannot be an implied or resulting function of any individual officer. Certainly it is sound to say that a power exercised by virtue of an usage is strictly a power exercised by virtue of a delegation of authority which the law, by reason of the usage, conclusively presumes to have been made. Therefore the recognition of the fact that the corporate government could delegate this power carries with it a recogni- tion also of the further fact that the usage (which conclusively implies such delegation as matter of imperative law), if proved, would be good. Yet the tendency of the court in this case appeared so strongly opposed to any possible validity of the usage, that it has been often cited and commented upon as if it went to this length. In point of fact it is an unavoidable logical sequence from the language used that the usage, if shown, would be valid, though perhaps this result of his own words was not recognized even by the learned judge. A little fault also can be found with the phraseology in this opinion. Cer- tification is said to be a pledging of the credit of the hank. This has a formidable sound, as though an act so important should be done by or under the immediate supervision of those officials who have the supreme discretionary control of the cor- porate business. But the phrase is deceptive. It is obvious that in point of fact, if the transfer of credit from the drawer to the payee or to " certified check account " is duly made, con- temporaneously with the certification, there is no possibility 1 9 Met. 306. 202 POWERS, DUTIES, AND LIABILITIES of any loss accruing to the bank. As well might it be said that if A. draws his check in favor of B., both being depositors in the same bank, and B. deposits it, the shifting of the credit from the one to the other is a pledge of the credit of the bank. Practically, instead of being called a pledge of credit it should be considered a transfer of credit, and should be regarded as a mere matter of book-keeping. It is true that the bank is bound by the acceptance as by a promise to pay ; but it is only a promise to pay a sum actually left with it for the express purpose of being used for such payment and already due and owing. It is under a similar obligation to every depositor in the bank, though the ordinary depositor has no more accurate written evidence of the amount to his credit than is furnished by his bank-book. Before the acceptance the debt ran to A. the drawer ; after the acceptance to B. the holder. There seems nothing very objectionable in allowing the cashier to make this change. These words, therefore, if they can be regarded as describing a business operation involving risk and calling for discretion, are in fact seriously deceitful. In many banks, where cashiers are not permitted to certify, they are accustomed, upon request, to give their " cashier's check," of which the practical effect is not to be distinguished from the result of certification, and which there can be no question of their power to do. The real objection to the practice of cer- tification lies in the dread of its being abused by careless certification when there are no funds or an equally careless subsequent paying out of funds on checks of the drawer so as to reduce his deposit below the amount called for by the cer- tified check. Theoretically, certification is harmless; it is neglect to abide by the theory that has brought it into un- merited disrepute. Even if this case ^ could be construed, which we have tried to show that it cannot, to support the view that usage could not confer upon an officer the power to bind the bank by certifica- tion, yet in this it would stand alone against a great weight of contrary authority. The Pennsylvania case, cited above,^ shows ' Mussey v. Eagle Bank, 9 Met. 306. " Girard Bank v. Bank of Penn Township, 39 Penn. St. 92. OP 0PPICEE8 AND AGENTS. 203 that ill that State the power may be conferred and will be up- held. And though the reticence of the judges is such that they do not intimate how it should be conferred or under what circumstances it will be upheld, yet if it can be thus treated by any means, even by the most formal vote, it can also be sus- tained by inference resting upon proof of established usage. The New York cases are numerous and united in sustaining the authority derived from usage.' It would seem to be an universal custom in that State for either the cashier or the teller to certify checks. Nothing being easier than to prove this custom, it was usually done at the trial of all the causes. But a recent case declares directly that the power of certifi- cation is inherent in the office of cashier, and criticises the Massachusetts decision quite sharply as being based upon an idea that the power of certification was the creature of usage or custom. The decision is said to be twenty years old, to have been never reiterated in Massachusetts, to have been repudiated in New York and other States, and not now properly to be re- garded as law even in Massachusetts so as to override " a general rule of construction, based upon the principles of the common law of universal application."'' Previously the New York cases had not strictly been precedents 'upon the point of the inherent character of the power ; though the Massachusetts case had already been severely criticised, and a plain willing- ness shown to override it upon necessary occasion.^ The most important case which has ever arisen concerning the power of the cashier to certify is that of the Merchants' Bank v. State Bank,* which was first tried in the United States Circuit Court for the first circuit, before Clifford and Lowell, JJ. The decision in the lower court was against the validity of the certified checks. The case was carried to the Supreme 1 Farmers' & Mechanics' Bank v. Butchers' & Drovers' Bank, 16 N. Y. 125; Meads v. Merchants' Bank, 25 id. 143 ; Clarke National Bank v. Bank of Albion, 52 Barb. 592 ; Willets ^. Phoenix Bank, 2 Duer, 121 ; and the New York cases cited in the remainder of this chapter. 2 Cooke !>. State National Bank of Boston, 52 N. Y. 96, affirming same case in 50 Barb. 339, 1 Lans. 494. 3 In Farmers' & Mechanics' Bank v. Butchers' & Drovers' Bank, 16 N. Y. 125. * 10 Wall. 604. 204 POWERS, DUTIES, AND LIABILITIES Court of the United States, and this decision was reversed. It was there held that the power of the cashier to do such an act might be properly inferred by the jury from the facts of his doing such cognate acts as drawing checks against the bank, borrowing and lending money and the like. But substantially the court upheld the power as inherent in the office. It is the duty of the cashier, say the court, " to receive all the funds which come into the bank, and to enter them upon its books. The authority to receive implies and carries with it authority to give certificates of deposit and other proper vouchers. Where the money is in the bank, he has the same authority to certify a check to be good, charge the amount to the drawer, appro- priate it to the payment of the check, and make the proper entry on the books of the bank. This he is authorized to do virtute officii. The power is inherent in the office." It should be remembered that the court is here dealing with the cashier of a bank organized under the act of congress creating the national banking system of the United States, which act ex- pressly allowed the bank to make such a purchase of coin as that for which this cashier had given these certified checks. The by-laws of the bank were also referred to, which made the cashier responsible " for the moneys, funds, and all other valu- ables of the bank ; " and declared that " all contracts, checks, drafts, receipts, &c., shall be signed either by the cashier or president." But no especial knowledge of these by-laws was asserted or shown on behalf of the plaintiff, nor can it be said that they confer upon the cashier any more extensive or dififer- ent authority than that naturally and customarily enjoyed and exercised by any cashier according to the ordinary and well- known usage and general manner of conducting the banking business. The bank may expressly delegate the power of certifying to its president, its cashier, or its teller. But it would seem that the fact that such power is so specially delegated to any other officer than the cashier, would not necessarily be exclusive of such power as inhering in the cashier also, at least in the ab- sence of actual notice to any party to be affected.^ 1 Merchants' Bank v. State Bank, 10 Wall. 604, at p. 650. OP OFFICERS AND AGENTS. 205 Judge Selden regards the teller as 'the more proper oiEcer, on the ground that of course the cashier could certify, but that the teller's oflfice is an offshoot of the cashier's, and has appropriated that peculiar description of duties, which ren- der it more convenient for the teller to assume this function also.^ A bank, which allows an officer to certify checks, can of course impose upon his authority any restrictions it may choose. As usual, these restrictions will always be valid as between the officer and the bank. But if it should be decided that the power of certification is inherent in any special officer, or if local usage should be such that he is to be regarded as held out to the world as possessing the general power of certi- fication subject to no unusual limitations, notice of the ex- istence of such restrictions must be brought home to the knowledge of any third persons who are to be affected by them.^ Notice that a bank has refused to become party to an agree- ment entered into between other banks in the same city for set- tling clearing-house balances by certified checks is not notice that the same bank does not permit its cashier to certify checks in the ordinary manner in the daily course of business. The two things are not equivalent.* One limitation, however, the law lays down in all cases : A cashier cannot certify the check of a drawer who has not unincumbered funds in the bank suffi- cient to meet the check. Any person having notice of the fact that the bank had not enough of the drawer's funds on hand to meet the check at the time of certification will be presumed to know that the act was unauthorized and void, and will not be allowed to hold the bank liable upon it.* But any outside party is justified in accepting the representation of the officer as to the sufficiency of the drawer's credit, or in assum- ing without special inquiry that all is right solely on the I Farmers' & Mechanics' Bank v. Butchers' & Drovers' Bank, 16 N. T. 125. Irving Bank v. Wetherald, 36 N. Y. 335. ^ Clarke National Bank v. Bank of Albion, 52 Barb. 592 ; Merchants' Bank V. State Bank, 10 Wall. 604.' ' Cooke V. State National Bank, 52 N. Y. 96. ^ Cooke V. State National Bank of Boston, 52 N. Y. 96, affirming same case in 50 Barb. 339, 1 Lans. 494. 206 POWERS, DUTIES, AND LIABILITIES strength of the undertaking itself. Knowledge that the agent cannot certify without funds is not knowledge that there are no funds. This is an extrinsic matter. A certification ac- cepted on the faith of the cashier's or teller's statement that he was authorized to certify would not bind the bank if he was not so authorized. But his statement, directly or by implica- tion, that there are the requisite funds in the bank is of a different nature, and will bind the bank. In general terms, it may be said that where one dealing with an agent ascertains that the agent's act corresponds exactly with the terms of the power, he may take the agent's representation as to any ex- trinsic fact, peculiarly within the agent's knowledge, and not ascertainable by a comparison of the power with the act done under it.^ " The certificate of the cashier of a bank that a check is ' good ' is a representation of a present existing fact, within his knowledge as cashier ; and if that certificate be made by him in the course of his ordinary business as cashier, it will bind the bank in favor of innocent third persons, upon the principle of estoppel in pais, even if the certificate be not true, and the drawer of the check has no funds on deposit in the bank." 2 Whether banks are competent, by usage or express agree- ment, to extend their liability so as to include cases where the certification is made in the absence of sufficient funds of the drawer, is a quaere in Cooke v. State National Bank ; ^ though it is said that Selden, J., has expressed an opinion in the negative.* An ofiicer, though authorized to certify generally, yet can- not legally certify his own checks. Apparently the rule covers equally cases where he has and where he has not money to the designated amount standing to his credit in the bank. The principles laid down, ante, p. 196, seem sufficiently to sustain this position. But if his certification is false, we have the ^ Farmers' & Mechanics' Bank, &c. u. Butchers' & Drovers' Bank, 16 N. Y. 125. 2 Morse v. Massachusetts National Bank, 1 Holmes, 209, per Shepley, J. And to the same purport is Pope v. Bank of Albion, 59 Barb. 226. 8 52 N. Y. 96. * Farmers' & Mechanics' Bank v. Butchers' & Drovers' Bank, 16 N. Y. 125. OP OFFICERS AND AGENTS. 207 authority of a thoroughly considered case for saying that it is utterly void as against the bank. The cause of Claflin v. The Farmers' and Citizens' Bank turned upon the validity of the president's false certification of his own check, in the hands of a bona fide holder for value. In the Supreme Court it was not denied that the act was wrongful and unauthorized as between the bank and the president. But it was said that the mere identity of name signed upon the check as drawer with the president's name was not alone sufficient to charge the holder with notice that they were one and the same person ; and there being no other proof of such notice, the bank was declared lia- ble. But in the Court of Appeals this ingenious evasion of the wholesome I'ule was rejected. The identity of name was re- garded as sufficient to put every one to whom it came upon inquiry as to whether the president was seeking to use his official character for his private benefit ; and, indeed, it may be suggested that there was not alone identity in name, but the similarity of handwriting in the two signatures ought also to have been taken into consideration. In a final and very satis- factory decision, the bank was declared not to be bound by the acceptance.^ TeUer. The office of teller is a narrow one, strictly limited to the specific function of receiving or paying out funds. If there be two tellers, one delegated to receive, the other delegated to pay out moneys, neither can properly discharge the duty of the other. A person wishing to make a deposit is bound to make it with the receiving teller. If he hands the money to the paying teller, he does not thereby accomplish his deposit, but only makes that teller his own agent to transfer the money to the receiving teller or to the bank ; and the bank will be liable for the amount only if the paying teller fulfils this undertaking and pays in the money to the proper officer or to the funds of the bank.2 ' Claflin u. Farmers' & Citizens' Bank, 36 Barb. 540 (Supreme Court), over- ruled in 25 N. Y. 293 (Court of Appeals). 2 Thatcher v. Bank of State of New York, 5 Sandf. 121. See aide, p. 51. CHAPTER IV. OFFICIAL BONDS. The custom of requiring bonds from the various officers may probably be considered as universal among banking insti- tutions. Usually they are taken only from the executive offi- cers ; most frequently from the cashier and tellers, sometimes from the book-keepers ; and there are instances, though these are comparatively rare, in which they have been taken even from the president and directors. Nearly all the questions •which have arisen in litigation upon these bonds may be di- vided into four classes, to wit : — I. Where it is denied that the particular act, which consti- tuted the default of the officer, was of such a description as to be covered by the language of the bond setting forth the pecu- liar species of misconduct insured against. II. Where it is doubted how long the liability of the sureties should be construed to continue, and therefore whether the default fell within tjie period- of their liability. III. Whether the bond can be avoided on the ground that it did not conform to the requirements of the charter or of the general organic law under which the institution came into existence. IV. Cases in which fraud or other illegality, charged to have been attendant upon the execution of the bond, are adduced as cause for invalidating it. Phraseology of the Bond. Of course considerable variety is found to exist in the form and language of the bonds used by different corporations, and especially in those portions wherein is described the species of OFFICIAL BONDS. 209 good and satisfactory conduct which is insured. Very com- monly only general phraseology is used. It is stipulated simply that the officer shall " well and faithfully," or " faithfully," or " well and truly," discharge and perform his duties. Practi- cally it may be considered that these phrases are equivalent each to either of the others. For though a finical linguist might seek to draw some delicate distinction between the sig- nification of the word " well " on the one side, and the words " faithfully " and " truly " on the other, yet such over-nicety is not encouraged by the law which has been laid down in the premises ; and it is safe to say that these words may be used interchangeably. The better rule of construction, which is to be applied to all alike, seems to be that they are designed not only to guaranty honesty and obedience, but also reasonable skill, competence, and diligence. The reason for taking the bond is by no means limited to the narrow object of protecting the banking-house only against loss arising from embezzlement or other species of criminal conversion and misappropriation, but also against the equally mischievous danger of carelessness, thoughtlessness, and ignorance.^ The security for the " faith- ful discharge " of duties would be rendered " utterly illusory," if its import were to be narrowed to a guaranty against perso- nal frauds only. Duties performed negligently and unskilfully, or violated from want of capacity or want of care, can never be said to be " well and truly " executed.^ In Massachusetts a bond calling only for " faithful " performance was declared to bind the obligors not only for the honesty of the officer but also for his " faithful execution of the duties of his office, which embraces competent skill and due diligence." ^ It must certainly be considered that these two cases, one of which was decided in the highest tribunal in the land, establish the cor- rect rule of law. Yet in New York there is a well-known cause in which precisely the opposite doctrine was laid down. The bond of a teller was conditioned that he should " well and faithfully perform the duties," &c. The court declared that 1 Rogers v. Kelly, 2 Camp. 123. 2 Minor v. Mechanics' Bank, 1 Pet. 46. ^ American Bank v. Adams, 12 Pick. 303. 14 210 OFFICIAL BONDS. this was security solely for his honesty in his trust, and not for his competency.^ Yet it is very curious to note that, though the conflict between the abstract statement of law in New York and in Massachusetts could not well be more direct and appar- ently irreconcilable, nevertheless both courts, having substan- tially like facts to deal with, might not improbably come to very nearly the same practical results. In New York, it was said that an over-payment by mistake, honestly made, was a matter of incompetency, and was not insured against in the bond. In Massachusetts, it was an obvious inference from the language of the court that, if the fact was that the deficiency was caused by an over-payment, made -honestly and through a simple mistake, then evidence that experienced and able tellers were liable occasionally to make such mistakes would have been admitted for the purpose of showing that at least this fact did not of itself suffice to prove incompetence. It is not to be supposed that ample evidence of this description could ever be found inaccessible. Whence it might not improbably occur that, upon diametrically opposite doctrinal bases, the same conclusion of acquitting the sureties might be arrived at. - If the two above-cited decisions are the only ones which directly and in terms run counter to the New York decision, there is yet a decision in the Pennsylvanian Reports, which fails to do so only because it goes much farther, though in the same direction, than either the Supreme Court of the United States or the bench of Massachusetts. In this case the bond was con- ditioned that " J. B., the cashier, shall well and truly perform the duties of cashier of the bank aforesaid, to the best of his abilities." The italicized words certainly ought to have suf- ficed to exclude from the operation of the guaranty acts of simple incompetency or ignorance, if any language short of an exclusion in terms could do so. The defendant's counsel argued thus, and urged that the insurance of the bond was restricted to the cashier's fidelity and honesty ; the degree of his ability might be considered as expressly exempted, provided his best ability, such as it might prove to be, was uniformly 1 Union Bank v. Closeey, 10 Johns. 271 ; 11 id. 182. OFFICIAL BONDS. 211 used. Certainly these arguments were not devoid of force. The court complimented them as ingenious, but declared them unsound. The opinion held, substantially, that the covenant was that the cashier should discharge the duties of his appoint- ment, that is to say, that he should do so with competent skill and ability. It was said that one who accepts an office or trust of any kind contracts to execute it with competent skill and ability ; his sureties, who are bound that he shall execute it according to his skill and ability, warrant for the performance of this contract of the officer. His undertaking is to act ac- cording to the duties of his station. So, if by his act of honest intention, but in excess of his authority, the bank suffers a loss, it must be reimbursed by the obligors in the above bond.^ This is subtle and not altogether unanswerable reasoning. It pro- ceeds on the basis of what it is supposed that the bond would naturally be designed to contain, rather than upon the basis of what it really does contain. There is a little confusion, more- over, between the undertaking of the cashier, implied by his entry into office, and that of the sureties, actually expressed in the instrument ; between the liability of the cashier at common law, and that which exists under and by virtue of the stipula- tions of the bond. It is true that the cashier by the acceptance of the trust impliedly contracted to exercise it with due skill and ability ; but it was hy the acceptance of the trust, strictly and literally, and not at all by the execution of the bond, that he thus contracted. It is possible that his acceptance of office may have placed him under obligations greater than those named in his bond. But to say that the sureties in the bond, who defined in perfectly intelligible language the extent to which they consented to become guarantors, could have the same extended until it became commensurate with a liability of another person, their principal, rising from an entirely alien origin, seems to us hardly a tenable position. It is not a logical sequence, but a verbal illusion, to say that because the cashier, by accepting office, binds himself to use due skill in its func- tions, therefore his bondsmen, expressly guarantying only that 1 Barrington v. Bank of Washington, 14 Serg. & E. 405. 212 OFFICIAL BONDS. he shall use skill " to the best of his abilities," impliedly as- sume and guaranty that the skill thus described is due skill. This is to read their contract by the light of his ; to embody his individual and implied undertaking, arising from his indi- vidual act, into their specifically-worded and independent un- dertaking ; to substitute the measure which a legal implication applies to his contract for skill, in place of the measure which they in their contract have taken pains to provide in exact phraseology. But, though the original soundness of this opin- ion may be thus criticised, yet it must be acknowledged to be the law. It has stood for long years unchallenged, and perhaps it would now be foolish to change it. It teaches one practical precaution : that no general form of words in a bank-officer's bond can be relied upon as sufficient to restrict the guaranty of the bondsmen to the mere personal honesty and integrity of the officer, unless these words, or their plain equivalents, are distinctly used, and are stated to constitute the limits of the intended insurance. But, though an over-payment by mistake may be set up, and often successfully, in defence to a suit upon a bond, it is neces- sary that the officer should have acted honestly, not only in the transaction of over-payment, but equally in reference to all matters which, however remotely, concern it or are connected with it. If he subsequently commits any deceit or fraud, or makes false entries in the books, for the purpose of concealing the deficiency, his dishonest dealing in this particular will suf- fice in the eye of the law to give the coloring of guilt to the entire affair from the very outset. It may still remain true that the actual loss of the money was caused wholly and solely by the innocent over-payment ; and that the subsequent mis- conduct could not aggravate the injury, as subsequent good conduct could not have remedied it. Still the acts resorted to for securing concealment are a suggestio falsi ; the concealment itself is a suppressio veri. Each is an unfaithfulness and jviH, as a rule, be assumed to have contributed to the injury suf- fered by the bank.^ 1 Union Bank v. Closaey, 11 Johns. 182 ; Rochester City Bank v. Elwood, 21 N. Y. 88. OFFICIAL BONDS. 213 If the bond, instead of insuring honesty and competency in such general terms as are displayed in the foregoing instances, enumerates specific acts in distinct language, and guaranties that the officer shall perform these acts, the peril of possible mistakes in their performance, however innocent and excusable the error may be, is assumed by the obligors. A deliberate undertaking, for example, that the cashier shall " deliver to his successor in office ... all moneys, securities, stocks, &c., &c.," is an absolute and unconditional guaranty for such de- livery, and the fact of an innocent loss, growing out of an excusable mistake, cannot be availed of in defence to a suit for non-delivery.i But a loss of moneys or securities by reason of a theft or robbery, accomplished without the collusion of the officer, and not furthered or rendered possible by his negligence or incom- petence, would be a good defence to a suit upon a bond written in any of the forms heretofore described.^ The bondsmen are certainly not insurers against the acta of any person, save the principal in the bond. Where the bond is inartificially and clumsily drawn, so that the careless collocation of inconsistent words would lead to absurdities if a literal construction were attempted, the court will revise and correct the language so as to render it conform- able to reason. 3 The phraseology of the bond, upon which the litigation in the cited case arose, furnishes a fair example of the method of application of this rule. The condition of the bond was that the cashier should " with fidelity, punctuality, and attention, to the best of his skill, judgment, and ability, conduct himself in said office well and truly, discharging all its duties, executing the orders of the directors of said bank, safely and securely keeping all moneys deposited in his hands," and doing a great multiplicity of other " duties, acts, and things," " all and singularly," according to the descriptions contained in several more adjectives and adverbs. The writer 1 State Bank v. Chetwood, 3 Halst. 1. '^ Allison V. Farmers' Bank, 6 Rand. 204 ; American Bank v. Adams, 12 Pick. 303 ; Planters' Si Merchants' Bank v. Hill, 1 Stew. 201. a Planters' & Merchants' Bank v. Hill, 1 Stew. 201. 214 OFFICIAL- BONDS. of the .bond was evidently floundering in a sea of words, and the court was obliged to come gallantly to the rescue. They declared that it was evident from the very nature of the lan- guage, that it was not intended to apply all the restrictions to each particular duty ; but that an intelligent apportionment should be made of the various expressions among the divers " duties, acts, or things " respectively, as from their several . natures they might be susceptible of the qualifications men- tioned. Thus " punctuality " could hardly be called for in " keeping," but rather in " accounting for " or " paying over " money. On the other hand, "judgment and ability" rnight be required in " keeping" and " skill " in " accounting," but neither of these qualities could be of much assistance in the business of " paying over." The surety will never be held to guaranty the performance of the duties of a public office in a manner either absurd or impossible simply because an awk- wardly phrased bond would subject them to this obligation if an effort were made to construe it strictly according to its wording. Change in the Identity of the Bank or Firm. Where there is a change in the banking firm to which the obligation of the bond runs, it will depend upon the lan- guage of the bond whether it will enure to the benefit of the new firm. It may be so written that the obligation is to the original firm and to its successors through any number of subsequent changes ; or it may be so written that the obligation is only to the individuals who at the date of the bond composed the firm. An early case touching upon this question was that of Wright v. Russell.^ The guarantor in the bond undertook with A. for the fidelity of a clerk in A.'s employ, so long as he should continue in A.'s service as clerk. Afterward A. took a partner, and the clerk being in default, suit was brought by A. upon the bond, alleging that the clerk had received money on account of the partnership, and had not 1 3 Wils. 530 ; 2 W. Bl. 984 ; also to same effect is Dry v. Davey, 10 Ad. & El. 80. OFFICIAL BONDS. 215 paid it over. But the court held that A. could not recover ; that the taking of a partner by A. put an end to the obligation. The condition of the obligation ran to A. alone, and the breach was not strictly within the condition ; nor was there any thing to show that the surety intended to guaranty the clerk's fidelity to any other person than A. This case has been subjected to much criticism, but appears never yet to have been directly overruled upon any substantially identical condition of facts.^ Yet in sundry cases the obliga- tion has been held to be continuing where the court felt able to hold upon the facts that the bankers were really the same copartnership throughout the several changes.^ But a bond requiring the clerk to account to the banker and his executors, administrators, and assigns, does not cover de- faults committed subsequently to the obligee's death when the clerk is in the employ of the executors.^ Where the obligee, being a joint-stock banking company, received, after execution of the bond, a considerable accession of proprietors and capital, and thereupon increased the number of directors and changed its name, it was nevertheless held that the bond continued a live security, surviving these changes, on the ground that the bank, not having changed its constitution in any respect, had preserved its identity.* This seems to be the true test, in theory, whether the obligee has lost or continued his or its identity. But, as usual, the diffi- culty lies in applying the theory to the facts, and determining the question of continued identity. Some of the cases seem to make a break very much easier of accomplishment than others. 1 Barclay v. Lucas, 3 Dougl. 321 ; 1 Term, 291, n. Though as would appear by the note at the end of the report of this case in Douglas, this also has not escaped question. 2 Chapman v. Beckington, 3 Q. B, 722 ; Metcalfe v. Bruin, 12 East, 400 ; Wilson V. Craven, 8 M. & W. 584. ' Barker v. Parker, 1 Term, 28Z; but see Strange v. Lee, 8 East, 490. < Metcalfe v. Bruin, 12 East, 400. 216 OFFICIAL BONDS. Evidence. In a suit to recover a deficiency in money, or the value of securities which ought to be but are not forthcoming, it is sufficient for the bank in the first instance to allege and prove that they came into the hands and possession of the officer, and have not since been returned or accounted for by him. These facts, laid in the declaration and satisfactorily estab- lished on the trial, suffice to create a presumption that the missing property has been wasted or misappropriated by the officer. If the deficiency is in the money, or uninvested funds of the bank, it is not necessary for the bank to declare or to prove the receipt, at certain times, of specific sums by the cashier, from individuals named, and to allege these particular sums to have been since lost or converted. Obviously this would be at once a useless and an impossible I'equirement. All the sums paid into the bank are usually blended into one aggregate mass, and the waste, loss, or embezzlement in the great majority of cases takes place from this. If at any time an officer should lose or embezzle the whole of any especial sum taken by him at one time from an individual, it would probably be totally impossible for the bank to assure itself of the fact. Consequently it is incumbent upon the bank to allege and prove simply that the officer has received a certain amount as a sum total, and that he has returned or accounted for a less amount, likewise as a sum total. If then the de- fendants seek to rebut the presumption of his liability for the difference which, unless they do so, becomes conclusive and supports a judgment against them, the burden is shifted upon them to allege and show that the deficiency occurred in some manner such as to relieve them from a liability, under the bond, to make it good. If to this end they intend to rely upon the innocent mis|;ake of the officer, or upon a robbery from him, either of which is a sufficient defence,^ they must set forth the time, place, and other circumstances attendant upon the 1 Walker v. British Guaranty Association, 18 Q. B. 277. Also the cases cited below in the discussion of this topic. OFFrCIAL BONDS. 217 mistake or theft with such certainty, if possible, as to show that it befell while the officer was acting duly and properly in the discharge of his functions according to the ordinary rules and customs of the business. It is not sufficient for them to show simply that the explanation is a reasonable or a probable one ; they must maintain it affirmatively as a positive fact.^ But the proof which will be required must be in accord- ance with the inti'insic nature of the fact itself. It would be seldom, for example, that a paying teller could show, with the certainty of demonstration, especially after the lapse of much time, that he had overpaid certain amounts on certain checks. The question would seem to be eminently fit for the decision of a jury, though in the case of the American Bank v. Adams, the court declared, as if it were a matter of law, that the evi- dence adduced was insufficient to sustain the defence of an innocent over-payment. The evidence was that the teller was considered to be honest, careful, and vigilant; that the directors had stated their belief that the loss occurred through over-payments ; that they had since continued to employ the teller in duties of trust and confidence ; and that similar inno- cent losses befell tellers so frequently that they might be re- garded as unavoidable incidents to the business of the office. The court said that all this doubtless went strongly to repel the notion of want of integrity, but nevertheless was not suffi- cient to " prove the specific mode of the loss ; " the defendant must maintain his justification affirmatively. It is not to be supposed, however, that the intention of the court in deliver- ing this opinion was to signify that the question of fact, to wit, what was the real cause of the loss ? was to be taken from the forum of the jury. Their language should rather be construed as a criticism made upon the evidence offered in a certain cause, and serviceable in suggesting the instructions which may in an appropriate case be given to a jury to guide them in weighing the testimony which is before them. It is clear that though the court may declare as matter of law that the 1 Allison V. Farmers' Bank, 6 Eand. 204 ; Minor v. Mechanics' Bank, 1 Pet. 46 ; American Bank v. Adams, 12 Pick. 303 ; Morris Canal & Banking Co. v. Van Vorst, 3 Zabr. 98. 218 OFFICIAL BONDS. jury shall not regard proof of a probability, established by testimony of a purely general character, as equivalent to definite proof of a specific fact, yet still it must remain for the jury, in subjection of course to this rule of law, to deter- mine whether or not that specific fact is proved to their reasonable satisfaction. If the plaintiffs assert that the oflScer has received a certain amount which he has never accounted for, it will be proper for the defendants to deny that he has ever received the amount. This leaves the burden of proving the receipt upon the bank. But if the defendants only answer that the officer has accounted for all that he has ever received, they have the onerous task of proving the correctness of both sides of the account, and of making them balance. They in fact relieve their adversaries of nearly all that work which would otherwise have to be done in establishing a prima fade case. Furthermore, if they deny the receipt, they may still plead excuses, if the receipt should be proved, which they could not do if they had adopted the other form of answer.^ Entries made by the clerk in the books kept by him in the course of his duties will, after his death, be evidence, against the sureties in his bond, of his receipt of the moneys therein entered as received.^ Designation in the Bond of the Department in which the OfBcer is to seive. It is commonly the case that the bond of the officer designates in some manner the department in which he is to serve. It may either state that he has been " elected the cashier," or may simply describe him as " teller," or may contract that he shall perform " the duties of the office of book-keeper;" or by some other similar form of words may recognize the general nature of the functions which he is intended to fulfil. It is obvious that these functions may be subsequently altered and enlarged by the directors, or that they may be in a measure 1 Exeter Bank v. Rogers, 6 N. H. 142. 2 Whitnash v. George, 8 B. & C. 566. , OFFICIAL BONDS. 219 curtailed and others substituted for them, or that the' officer himself may without authority transcend them, and that having so transcended them he may, in a province not his own, unin- tentionally commit some blunder and thereby cause a loss to the bank, or may designedly commit a fraud or a theft. In all these oases nice questions arise as to whether the act is covered by the undertaking of the bond. It is clear that the directors cannot materially increase the risks against which the bondsmen have consented to give their guaranty, without the assent, express or implied, of the bonds- men themselves. It has been frequently declared, however, that assent to moderate and reasonable alterations or exten- sions, made in the duties of officers, will be assumed by the law. The bondsmen are supposed to know that the powers of the board extend to making such changes as it may see fit in the regulations and conduct of the routine of corporate busi- ness. They are supposed to contemplate the probability, or at least the possibility, of such action intervening during the period of their liability, to affect it in some small degree, it may be slightly favorably or it may be slightly unfavorably. Within a reasonable scope they must anticipate and submit to variations thus caused. But manifestly this rule must be re- strained within the limits of the practical necessities and com- mon-sense rules of the business. Assent to any considerable increase of risk can never be implied. The character of the risk can never be materially altered. A book-keeper may have many more books given him to keep than he had at the time of the execution of the bond ; a cashier may be deputed to act as teller ; " for the office of teller is not higher tha,n that of cashier." Such changes do not work substantial increase in the bondsmen's risk, or an increase which it can be supposed that they would have repudiated, or would have considered unlikely to occur, when they entered into the contract of in- surance. The book-keeper is a book-keeper still ; though he has more labor, it is of the same nature ; the cashier only fulfils in person the functions of a subordinate, which are strictly consistent with his own office. But to raise an assistant book- keeper to the office of teller, or to the still higher office of 220 OFFICIAL BONDS. cashier; would assuredly be to vitiate his bond as a security for his good conduct and sufficient skill in his new position .^ It would be absurd to take for granted that persons willing to guaranty that a man has skill and ability enough to assist in keeping books are therefore willing to guaranty that he has skill and ability enough to be the teller or cashier of a banking corporation ; equally absurd to declare it to be an implication of law that, because the same persons will guaranty his honesty in the circumstances of such moderate opportunity and tempta- tion to fraud as he must encounter in the book-keeping, there- fore they will, and in fact do, guaranty the same honesty in the face of the vastly increased opportunity and temptation held out by the duties of teller or cashier.^ Words are sometimes added to the effect that the officer shall perform all the " duties of the said ofl&ce which may be pre- scribed by the directors." These words clearly enlarge, rather than restrict, the responsibility of the sureties, and distinctly anticipate that additional duties may be imposed during the term of the suretyship, and will be included within its protec- tion. But evidently these additional duties must be consistent with the functions of the office named ; or, if not consistent, they must at least be of a lower grade and a less risk. A teller could not be made a director, nor could a book-keeper be made a president, and still remain guarantied by this bond, by virtue of the enlarging power of this phrase.^ Still more in- definite language is sometimes used, as where a bond insured the " faithful discharge of the duties of the office [of book- 1 Anderson v. Thornton, 8 Q. B. 271. See also Grant on Bankers and Bank- ing, p. 260, and cases cited. He there lays down the principle, very soundly, that a variation, without assent of surety, which may amount to substituting a new for the old agreement, is an absolute discharge of the surety. This is sound and accords with the text, though Grant's further designation of any variation " which may prejudice " the surety ought in our view to have been rather more narrowly restricted, as by limiting it to cases of substantial preju- dice, or to prejudice of that kind or degree which the surety could not have been reasonably expected to contemplate as a possibility when he entered into the undertaking. ^ Minor u. Mechanics' Bank, 1 Pet. 46; Rochester Bank v. Elwood, 21 N. Y. 88. 8 Durkin v. Exchange Bank, 2 Patt. & H. 277. OFFICIAL BONDS. 221 keeper] and all other duties required of him in said bank." It is probable that substantially the same rules of construction would be held to govern in this as in the preceding case ; but no authorities render this certain.^ Next is the case where the officer deliberately transcends the allotted duties of the office named in his bond for the purpose of committing a fraud ; as, for example, where a book-keeper, having given bond specifically to perform the duties of book- keeper, and having, as book-keeper, no occasion and no right to handle the money of the bank, nevertheless overstepping the ordinary routine of his functions does touch and abstract money. Though there is a conflict of judicial authority con- cerning the law in such a conjuncture, yet we think that little hesitation will be felt by any professional man (and certainly none whatsoever by any unprofessional man) in selecting the better principle. In Allison v. Farmers' Bank,^ a Virginian bench held that the sureties on an accountant's bond were not liable for his theft of money from the teller's drawer, since his bond secured only his fidelity in the " office of accountant," and as accountant he was not put in possession of any money of the bank. This ruling seems thoroughly narrow and unsat- isfactory; it was rendered only by a divided court, and has been deliberately overruled in New York in the case above cited, of Rochester Bank v. Elwood,^ with the true criticism that its principle, if followed, would substantially cancel all official bonds. In this latter case, also, the bond specifically secured the faithful discharge " of the trust reposed in [the officer] as assistant book-keeper." In this case, also, he em- bezzled funds which, in the strict performance of his duties, he had no occasion to touch, and then he made false entries in his books to conceal the fact. This last feature in the case gives rise to some remarks in the opinion not perhaps strictly bearing upon the precise point in discussion ; but rather than mutilate, or give in an imperfect shape, the reasoning of the court, we shall condense the whole. The judge said that, con- 1 Planters' Bank v. Lamkin, R. M. Cliarlt 29. " 6 Rand. 204; vide ante, p. 213. 8 21 N. Y. 88. 222 OFFICIAL BONDS. struing the instrument by the light of attendant circumstances, he did not think that the bond was limited to insuring mere fidelity in the actual book-keeping. The book-keeper was in such close contact that he could easily abstract money, and more easily than any one else could conceal the abstraction by falsifying his books. These facts must be presumed to have been known to the sureties, when they guarantied his faithful performance of a trust as an employee in the bank. It cannot be fairly supposed that they intended to guaranty only that he should keep the books correctly, but rather that he should be honest and faithful in his trust as an employee of the bank. They engaged absolutely for his integrity and fidelity in the discharge of the trust of assistant book-keeper. The bond indicated the department to which he was to be assigned, and guarantied that he was a trustworthy person to discharge its duties. His " faithful discharge " of the trust implies an en- gagement that lie shall not transcend it to embezzle. If he does transcend it, and uses the opportunities it affords him, for the purpose of stealing, it is not a " faithful discharge." Therefore he is liable for the abstraction, ^er se. But espe- cially would he be liable if the false entries were concurrent and simultaneous with, and a part of, the guilty res gestce. A lia- bility which would clearly have accrued had these entries been made to enable a confederate to take the money cannot be evaded by the book-keeper's taking it himself. It is no de- fence that the false entries were made solely to enable him to escape detection. He used a means furnished by his agency to consummate successfully a fraud. The taking and the en- tries were one transaction, and it can hardly be contended that the ultimate loss of the bank was in no degree attributable to the false book-keeping and the abuse of trust as book-keeper. The falsification was parcel of the wrongful act, and this is deemed sufficient. Indeed it seems a reasonable general rule to assert that if the officer has, in any part of the transaction, acted otherwise than in perfect honesty and good faith, excuses cannot be heard to absolve the defendants. It is impossible to split up the transaction into parts, and to say this part was the only OFFICIAL BONDS. 223 part which actually caused the injury, and this part was honest. Such a system of legal anatomy is simply absurd. Originally it was open to the courts to declare the undertaking absolute, and to refuse to admit any explanatory matter by way of exculpation. If practical justice effected a relaxation of this possible stringency, yet it was only for the sake of pro- tecting substantial, bona fide innocence, not to aid in introduc- ing a practice of the artful secation of a complete whole into guilty and innocent components, and the referring the injury to the one or the other of these. If in any portion of the entire business there has been dishonesty, this must be regarded as tainting the whole. So it is no defence that a cashier has done a dishonest, irregular, or improper act, under the express directions of the board of directors, if he knew that their purpose in procuring the act to be done was wrongful.^ He is bound to obey them, doubtless, and it may be that he would have rejected any par- ticipation in the profits of their scheme. But neither his duty of obedience, nor his intention to keep his own hands clear from their illicit gains, are a justification or excuse for his connivance. The guilt that is in the act leavens its entirety. A bond insured that the clerk should " well and faithfully serve,"