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tion. When the representations will bear either construction, expressions of opinion or statements of fact, the jury must determine which they are.42

(e.) No officer can authorize another to perpetrate a wrong. Consequently, if an officer should act wrongly he could not defend himself by proving that he had been instructed to act in this manner. 4


42 American Nat. Bank v. Hammond, 25 Colo. 367; Teague v. Irwin, 127 Mass. 217; Sterne v. Shaw, 124 Mass. 59. When a president of a bank sells its stock at excessive prices based on fraudulent statements, he cannot compel the bank to reimburse him for the damage he has been compelled to pay the purchaser on the ground that the bank reaped the benefit of the sale, because it was his duty to know the condition of the bank and make a truthful statement of its affairs. Trimble v. Exchange Bank, 63 S. W. (Ky.) 1027.

43 Minor v. Mechanics’ Bank, 1 Pet. (U. S.) 46; Chew v. Ellingwood, 86 Mo. 260, 272; Cullen v. Thompson, 9 Jurist (N. S.) 85. “All persons directly concerned in the commission of a fraud are to be treated as principals. No party can be permitted to excuse himself on the ground that he acted as the agent, or the servant of another, and the reason is plain, for the contract of agency or of service cannot impose any obligation on the agent or servant to commit or assist in the committing of a fraud.” Ibid 88. CHAPTER X.



1. His authority is limited.
2. To what extent a customer is

bound by the authority of

each particular officer. 3. The mode of executing his au

thority does not affect an out

sider. 4. Bank is liable for his mistakes. 5. He is not personally liable for

his own mistakes. 6. He should give information of

violations of duty by other

7. Authority of a minor official

when acting temporarily for
a higher official.

8. Ratification of his conduct. 9. Appointment of a special agent. 10. Especially to make loans. 11. Effectiveness of parol authority. 12. Extent of authority, 13. Validity of contracts in which

agent is personally interested. 14. Imputation of his knowledge to

the bank
15. Effect of his declarations.
16. Responsibility of bank for his

17. Personal liability of agent.
18. Ratification of his conduct.

1. His Authority is Limited.

To complete the inquiry begun in the preceding chapter, the authority and liability of minor officials and special agents must be described. Unlike the principal officers, their authority is defined with more exactness; there is no wide margin of indefinite powers. Their authority is limited; and, if trans


I Walker v. St. Louis Nat. Bank, 5 Mo. App, 214, 217.

Whitehouse v. Bank, 48 N. Y. 239; Potter v. Merchants' Bank, 28 N. Y. 641; Hepburn v. Citizens' Bank, 2 La. Ann. 1007; Mechanics & Traders' Bank v. Banks, 11 La. 260. A paying teller can act as an agent of a notary public in demanding payment of a note by inquiring of the bookkeeper whether a deposit has been made to pay it. Browning v. Andrews, 3 McLean (U. S.) 576. The statements of a bank bookkeeper to a customer of a bank who had left a draft for collection regarding its payment are admissible in an action brought by him for the money. Simpson v. Waldby, 63 Mich. 439.

cended, the bank, unless ratifying or adopting their acts, is not bound. A statement, for example, made by the teller of a bank to the holder of a check that an endorsement thereon is genuine, is not binding, for the reason that he goes quite beyond his authority in expressing such an opinion. For the same reason a receiving teller, in receiving a deposit, cannot vary the ordinary terms or conditions on which deposits are received;' or agree to receive a check as cash contrary to the custom of the bank ;5 or receive a deposit when the institution is insolvent.6 Nor can any clerk erase the name of the comaker of a note;' or pledge a note belonging to the bank.8

2. When Customer is Bound by Authority of Particular Officer.

Although most of the duties of the minor officers are clearly defined, the ancient rule is somewhat relaxed, that a minor officer cannot bind his bank when acting outside his narrow province without the knowledge and command of his superiors. The rule has been changed for the security of persons who do business with banking institutions. It is quite impracticable for the outside public to know all the divisions of duty between bank officers, especially those of a great bank, in conducting its business. 10

Some principles, though, are fixed, which no outsider can ignore.

3 Walker v. St. Louis Nat. Bank, 5 Mo. App. 214.

4 Riley v. Albany Sav. Bank, 36 Hun 513, 517, affd. 103 N. Y. 669; Whitehouse v. Bank, 48 N. Y. 239.

5 Strong v. King, 35 Ill. 9. But he may receive a check for collection. Ibid.

6 Furber v. Stephens, 35 Fed. 17. See Chap. VI. $6.
7 Marine Bank v. Ferry, 40 Ill. 255.
8 Smith v. Lawson, 18 W. Va. 212.

9 City Nat. Bank v. Martin, 70 Tex. 643; Merchants' Bank v. State Bank, 10 Wall. (U. S.) 604, 650.

10 Munn v. Burch, 25 Ill. 35, 41 ; City Nat. Bank v. Martin, 70 Tex. 643. The delivery of a package addressed "T, cashier of the A bank,” to a clerk or receiving teller while discharging his duties is effective, especially if he has received a similar package which has been credited by the bank. Hotchkiss v. Artisans' Bank, 2 Keyes (N. Y.) 564; Sweet v. Barney, 23 N. Y. 335. See Chap. XII. $2.

Thus if a bank has both a receiving and a paying teller, every customer knows, or ought to know, that the one receives and the other pays deposits. 11 Consequently, if he should ask the receiving teller to pay a check, or the paying teller to receive a check, and he should comply, and any wrong should result, the bank could hardly be held responsible for the wrongful action of its officer, because the customer himself would be a participant in the wrong. Thus the depositor of a certified check drawn on another bank inquired of a discount and collection clerk if it was all right. The check had been forwarded to the drawee bank, which had collected it and credited the amount to the other. The clerk replied that the check was "all right.” It afterwards proved to be a forgery and was charged back to the depositor. The court declared that the only authoritative response the clerk could give was the collection of the check.12 On the other hand, if an officer is apparently acting as a substitute for another, a customer may rightfully presume that he is thus acting by command of his superior, and is, therefore, duly authorized to act in this manner. Thus, if a customer should see the receiving teller standing at the paying teller's window, while the latter was absent, he would be justified in assuming that the paying teller was away and that the receiving teller was acting in his place.18

3. Mode of Executing His Authority Does Not Affect an Outsider.

Again, an outsider is not presumed to know the bank's instructions to its servants concerning the mode of keeping its

II Thatcher v. Bank, 5 Sand. (N. Y.) 121.
12 Security Bank v. National Bank, 67 N. Y. 458.

13 Munn v. Birch, 25 III. 35, 41. "One wishing to deposit money in a savings bank who delivers it at the counter of the bank to one of its officers who has apparent or ostensible authority to receive the same, is not required to ascertain whether the board of directors has given such officer express authority to receive the deposit. If the conduct of the bank has been such as to justify the depositor in believing that he is authorized to receive the money, the bank cannot exonerate itself from liability by showing that no express authority therefor had been given by the board of directors.” Harrison, J., Burnell v. San Francisco Union, 136 Cal. 499, 501.

books and transacting its business generally, and therefore is not bound by them. Thus a depositor requested a book-keeper to enter on his pass-book, to his debit, several checks, and after he had done so the depositor drew another check, which he presented for payment and was paid. The bank claimed that the book-keeper's act was not binding because he had no right to enter checks on a pass-book until they had gone through other hands. But the court held otherwise, that the matter was solely between employer and employed. “By placing this book-keeper in that place,” said the court, "they accredited him to the public, and if he acted in violation to his instructions they must bear the responsibility."14

4. Bank is Liable for His Mistakes.

A bank is ordinarily liable for the mistakes, errors, negligence of its minor officials in transacting its business; especially for the non-observance of its rules and customs. Thus should a teller receive money without a deposit ticket or pass-book, required by a rule of the bank, and by mistake should credit the wrong person, the bank would be liable.15 Likewise a clerk who has authority to certify, binds his bank regardless of the condition of the drawer's account.18

5. He is Not Personally Liable for His Own Mistakes.

A minor official, like other officials, is not personally liable for a mistake.17 And if a teller, observing the usage of banks, should receive as cash the check of an individual in good credit, he would not be personally liable therefor should the drawer

14 Munn v. Birch, 25 Ill. 35, 41.

15 Jackson Ins. Co. v. Cross, 9 Heisk. (Tenn.) 283, 287. “Where the power is habitually exercised by an agent, such as a teller of a bank, with the knowledge and acquiescence of the bank, the exercise of the power defines and establishes as to the public, the power so exercised.” Muth v. St. Louis Trust Co., 94 Mo. App. 94, 108.

16 French v. Irwin, 4 Bax. (Tenn.) 401 ; Cooke v. State Nat. Bank, 52 N. Y. 96, 114; Munn v. Burch, 25 I11. 35, 41. See Chap. XXIII. $2.

17 Union Bank v. Knapp, 3 Pick. (Mass.) 96, 108; Union Bank v Clossey, 10 Johns. (N. Y.) 271.

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