App. Div. 66]

First Department, May, 1921.

the termination of this contract." This contract Turner refused to sign and he was thereupon discharged. Nevertheless he is now bound by this decree never at any time or place to enter into a similar or competing business. Mary Calrow, working for the defendant as typewriter and office clerk, knowing nothing of the alleged secrets or process of manufacture, not claimed to have copied or used any trade lists or brought any information that she could not properly bring to the new enterprise, is perpetually enjoined without limitation of time or place from engaging in a similar or competing business, although she never signed any agreement, but worked from week to week with no term. George H. Chadwick, who worked for the plaintiff a few weeks during his school vacation as a boy having no special knowledge of the business, is likewise forever enjoined; and Moffat and Himer, who never had any previous connection with the plaintiff, are also perpetually enjoined..

The Stampagraph Co., Inc., was organized by Arthur Turner, George H. Chadwick, Mary Calrow, Henry A. Himer and Alexander W. Moffat in March, 1919, with a capital of $2,000; and is manufacturing some of the articles that the plaintiff manufactures under the process set forth in the Scott patent. They purchased two machines from the person who made machines for the plaintiff. As the machine was not patented and the manufacturer was not then bound by agreement not to manufacture them for others, he had a right to sell and they to buy. The evidence does not show that the defendants are using any secret process of the plaintiff.

The judgment and findings inconsistent with this opinion should be reversed, with costs, and judgment directed for the defendants, with costs.

CLARKE, P. J., LAUGHLIN, SMITH and MERRELL, JJ., concur.

Judgment reversed, with costs, and judgment directed for the defendants, with costs. Settle order on notice.

First Department, May, 1921.

[Vol. 197

E. MOCH COMPANY, Respondent, v. BRYANT PARK BANK,

Appellant.

First Department, May 27, 1921.

Banks and banking action to recover money deposited in name of plaintiff bank may rely on certificate of secretary of depositor that president was also treasurer and had authority to draw checks checks of plaintiff signed by third person as treasurer and deposited in defendant bank not notice of lack of authority — failure to show that plaintiff was damaged by alleged unauthorized deposit laches estoppel.

66

In an action to recover money deposited in the plaintiff's name in defendant bank it appeared that the plaintiff's then president opened the deposit through the vice-president of the defendant, that on the demand of said vice-president there was filed with the defendant a certificate executed by the plaintiff's secretary under the corporate seal which purported to set forth the minutes of plaintiff's board of directors some three years before the deposit was made and a resolution passed at that time stating that "Eugene Moch was duly elected president" and also as treasurer" and that all checks, notes and drafts and orders for the payment of money be signed by the president Eugene Moch, and countersigned by the treasurer Eugene Moch." It did not appear for whose benefit the money so deposited and checked out was used, whether for the benefit of the president personally or for the benefit of the plaintiff and there was no intimation that the secretary had any personal interest in the opening of the account. The account was closed about four years before this action was instituted.

Held, that the defendant was justified in relying on the certificate signed by the plaintiff's secretary bearing the seal of the plaintiff. The defendant was not chargeable with knowledge of the lack of authority on the part of the plaintiff's president to sign checks as treasurer by the fact that the president, who had a personal account with the defendant, deposited checks of the plaintiff in that account which were countersigned by another person as treasurer of the plaintiff.

The plaintiff failed to show that it was actually deprived of moneys by reason of the alleged unauthorized deposit, and it did not explain why it waited nearly four years before it notified the defendant of the fact that the account had been improperly opened and why during that time it did not ascertain that the check with which the account was opened and which was the principal deposit, had been diverted and not deposited in its regular bank.

App. Div. 78]

First Department, May, 1921.

The issuance of the certificate by the secretary of the plaintiff that its then president was its president and treasurer and authorized to sign its checks, estopped plaintiff from denying the truth of the representation of its Secretary.

APPEAL by the defendant, Bryant Park Bank, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 9th day of December, 1919, on the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk's office on the 5th day of January, 1920, denying defendant's motion to set aside the verdict and for a new trial made upon the minutes.

Benjamin L. Fairchild of counsel [James W. McElhinney, attorney], for the appellant.

William Bondy, for the respondent.

GREENBAUM, J.:

The complaint alleges in paragraph III that between September 18 and December 6, 1908, defendant received moneys of and belonging to the plaintiff to and for "the use of the plaintiff, amounting in the aggregate to the sum of $15,180.35," which the defendant refused to pay to the plaintiff although duly demanded.

Plaintiff called a single witness to compute the amount of interest upon the claim and rested.

The evidence on behalf of the defendant uncontradictedly establishes the following facts: When the account was opened with the defendant bank its vice-president and cashier told Eugene Moch, who was then president of the plaintiff corporation, that no moneys could be withdrawn from the account unless he first obtained a certificate from the plaintiff showing who were authorized to draw against the account. A printed blank form was handed to the plaintiff's president for the purpose of having it filled out as a certificate of authority.

The certificate was duly filed with the defendant signed by the plaintiff's secretary with the seal of the plaintiff corporation. It purported to set forth the minutes of the plaintiff's board of directors of December 31, 1905, and a

First Department, May, 1921.

[Vol. 197 Indeed, he testified that he never observed any checks of the plaintiff with the signature of Brodie as treasurer. It would scarcely be expected under the circumstances disclosed and where the checks deposited in Moch's personal account were in fact of comparatively small amounts, that an executive officer would charge his mind with the name of the person who countersigned such checks.

We are of opinion that there should have been evidence on the part of the plaintiff showing that it actually was deprived of moneys by reason of the alleged unauthorized deposit. We also think that there should have been some explanation why plaintiff waited nearly four years before it notified the bank of the fact that the account had been improperly opened and a further explanation why during that period of years the plaintiff did not ascertain that the check for upwards of $13,000 of Sears, Roebuck Company with which the account had been opened had been diverted and not deposited in the Union Exchange Bank which it was stated was its regular depository.

We are also of the opinion that the issuance of the certificate of the secretary of plaintiff, that Moch was its president and treasurer and authorized to sign its checks, estopped plaintiff from denying the truth of the representation of its secretary. (New York & New Haven R. R. Co. v. Schuyler, 34 N. Y. 30.) In that case the court said (at p. 68): "It is impossible to escape the conclusion that the law of this State, as settled by adjudication at this day, is, as put by H. R. SELDEN, J., in Griswold v. Haven [25 N. Y. 595] 'that where the authority of an agent depends upon some facts outside the terms of his power, and which, from its nature, rests particularly within his knowledge, the principal is bound by the representation of the agent, although false, as to the existence of such fact.'"

At page 73 the court said: "We may come back, therefore, to the solid ground of the North River Bank v. Aymar [3 Hill, 262] regarding it only as shaken down to greater firmness by the severe ordeal of the Farmers and Mechanics' Bank case* and with confidence declare the true doctrine of this branch

*Farmers & Mechanics' Bank of Kent County v. Butchers & Drovers' Bank (16 N. Y. 125). — [REP.

App. Div. 78]

First Department, May, 1921.

of the law of agency to be that where the principal has clothed his agent with power to do an act upon the existence of some intrinsic fact necessarily and peculiarly within the knowledge of the agent, and of the existence of which the act of executing the power is itself a representation, a third person dealing with such agent in entire good faith pursuant to the apparent power, may rely upon the representation, and the principal is estopped from denying its truth to his prejudice. In this view, I see no ground upon which the plaintiffs can, in this case, be permitted to deny that Schuyler was acting within the scope of his authority in issuing the false certificates; and they are therefore to be treated as though issued by the board of directors."

*

At page 70 the court in the Schuyler case refers to the wellrecognized rule that "Whenever one of two innocent parties must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it.""

In Fifth Avenue Bank v. F. S. S. & G. S. F. R. R. Co. (137 N. Y. 231), which was a case involving the issuance of a forged certificate of stock signed by the president, the court said (p. 237): "With respect to this certificate we fail to discover any omission on the part of the plaintiff which would impeach its character as a bona fide holder. It made inquiry at the office of the defendant, where its books and records were kept, and of the officer in charge, whose duty it was to furnish correct information upon the subject, and it had no reason to suspect that the assurances it received were misleading or false, or that the officers of the defendant had entered into a conspiracy with Hofele to defraud the public. It resorted to the only source of verification of the truth of Hofele's statements which was readily accessible; and it exercised all the care and vigilance which a prudent man would be expected to exhibit in the ordinary course of the business in which it was engaged."

This is not a case where the secretary of the corporation was individually interested in the transaction which resulted in the opening of the deposit account with defendant and where the latter knew or had reason to suspect that the plaintiff's secretary had any personal interest therein. (Manhattan Life Ins. Co. v. F. S. S. & G. S. F. R. R. Co., 139 N. Y. 151.)