have no funds.18 But if, after receiving such a check, he should consent to take it as his own, and to look to the drawer for payment, he could not return the check to the bank without its consent.

19

A teller who should knowingly assist the cashier or other officer in embezzling the funds of the bank would be personally responsible for the loss to which he had contributed.20 And if he should take the bank's money and apply it to his own use, the cashier's consent would be no shield for his conduct.21

6. He Should Give Information of Violations of Duty by Other Officers.

Closely related to the duty of oversight by superior officers of those below them, is the duty of the latter to give information to their superiors concerning any violation of duty by one of their number. While it is no function of theirs to practice espionage, when they clearly see that their superiors are doing wrong, they have a clear duty to perform in putting their knowledge within the light of one or more directors or superiors who are likely to make use of it.22 Thus the Supreme Court of New Jersey remarked of a teller who knew of the wrongful conduct of a cashier "when he was led to believe that the cashier was violating his own duty to the bank and was taking the bank's funds for his own ends, irregularly and without authority from the directors, the teller had no more right to aid in and connive at such appropriation [by maintaining silence] than if it were being perpetrated by a stranger.”23

18 Union Bank v. Mackall, 2 Cranch C. C. (U. S.) 695; Russell v. Hankey, 6 Term (Eng.) 12.

19 Ibid.

20 Hobart v. Dovell, 38 N. J. Eq. 553.

21 Shew v. Ellingwood, 86 Mo. 260; Taylor v. Bank, 2 J. J. Marsh. (Ky.) 564; Rochester City Bank v. Elwood, 21 N. Y. 88. See also Pittsburg & Chicago R. Co. v. Shaeffer, 59 Pa. 350; German-American Bank v. Auth, 87 Pa. 419; Engler v. People's Fire Ins. Co., 46 Md. 322.

22 Fiala v. Ainsworth, 63 Neb. 1.

23 Hobart v. Dovell, 38 N. J. Eq. 553.

7. Authority of a Minor Official When Acting Temporarily for a Higher Official.

What authority does a minor official possess who serves in a higher place during the latter's absence? The question was once answered with respect to a clerk who served as cashier. He had whatever power was necessary "to carry on the usual and ordinary business of the bank."24 But he had no power to pledge the bank's securities "unless they became pledged by the mere act of transmitting for collection."25 An assistant cashier who is acting as teller and cashier can certify a check.26

8. Ratification of His Conduct.

The acts of a teller, book-keeper, or other clerk can be ratified, like those of a president, cashier, and other officers.

9. Appointment of a Special Agent.

Besides its regular officers, a bank may appoint one or more special agents, who may be a director, the president,27 cashier or an unofficial person.28 A bank, too, may serve as an agent of another, which is often done in making collections.29

The initial inquiry relates to the mode of appointing agents. "An agency," says Chief Justice Robertson, "for collecting and securing the debts of a corporation may be created without a written power of attorney authenticated by the corporate

24 Potter v. Merchants' Bank, 28 N. Y. 641. The authority of a teller to accept and discount notes may be established by showing that in the absence of the cashier he had often done so with the subsequent approval of the higher officers. Iowa Nat. Bank v. Sherman, 97 N. W. (S. Dak.) 12. For the responsibility of a bank for the error of a new clerk temporarily taking the place of a sick one, see T. B. Clark Co. v. Mount Morris Bank, 85 N. Y. App. Div. 362.

(N. Y.) 592.

In Cake v. Pottsville

25 See Smith v. Lawson, 18 W. Va. 212, 228. 26 Clarke Nat. Bank v. Bank of Albion, 52 Barb. 27 Potter v. Merchants' Bank, 28 N. Y. 641, 650. Bank, 116 Pa. 264, 270, the president of the bank in effecting a settlement with a debtor and taking a renewal note "was not performing the duties of the directors respecting discounts; he was a mere agent." Yet whatever he did within the apparent scope of his authority to obtain the new security was binding on the bank which accepted and held it.

28 Potter v. Merchants' Bank, 28 N. Y. 641, 650.

29 Clarke Nat. Bank v. Bank of Albion, 52 Barb. (N. Y.) 592.

seal."30 It may be implied from his acts. In like manner an attorney can prosecute a suit for a bank without authority under seal.31 Says Justice Foster, speaking for the Supreme Court of Maine: "In this state, as well as many others, it is held that the same presumptions are applicable to corporations as to individuals, and that a deed, vote, or by-law is not necessary to establish a contract, promise, or agency."32 The authority of an agent of a corporation may be inferred from the conduct of its officers, or from their knowledge and neglect to make objections, 33 An agency, however, cannot be inferred by making one's note payable to a bank.34 Nor will the remission of money to a person as agent of a bank, or as a director, create an agency.35 Nothing short of its action establishing that relation will be effective.36 But if a bank should deliver notes to a person with the request to pass them for the benefit of the institution; or, if he could not, to return them, and he should agree to do so, he would be an agent for transacting the business.37 Lastly, there is a strong presumption in favor of the authority of a person who has acted for a long time as agent, with the knowledge of the bank.38

10. Especially to Make Loans.

In making loans, on several occasions the question has arisen whether the intermediary was the agent of the borrower or the lender. Thus the correspondent of a banking company, who had advertised money to lend, in filling out an application for a loan, stated that the applicant employed him, and not the

30 Lathrop v. Commercial Bank, 8 Dana (Ky.) 114, 115.

31 Osborn v. Bank, 9 Wheat. (U. S.) 738.

32 Fitch v. Lewiston Steam Mill Co., 80 Me. 34, 38.

33 Sherman v. Fitch, 98 Mass. 59, 64; Badger v. Bank, 26 Me. 428.

34 Agricultural Bank v. Burr, 24 Me. 256.

35 Heirs of Holman v. Bank, 12 Ala. 369; People's Bank v. St. Anthony's R. C. Church, 109 N. Y. 512.

36 Ibid.

37 Towson v. Havre-de-Grace Bank, 6 Har. & J. (Md.) 47.

38 Smith v. White, 5 Dana (Ky.) 376; McDonnell v. Branch Bank, 20 Ala. 313; Cobb v. Lunt, 4 Me. 503; Warren v. Ocean Ins. Co., 16 Me. 439: Valentine v. Packer, 5 Pa. 333.

banking company, to negotiate the loan. The borrower was not estopped from showing that the correspondent was the agent of the banking company.39 In another case a loan was effected by a banking company, which retained therefrom a commission. The company was held to be the agent of the lender, notwithstanding a recital in the application for the loan that the company was the agent of the borrower. 40

11. Effectiveness of Parol Authority.

41

A parol authority will support a written contract made by an agent. Justice Foster, after stating the ancient rule, has declared: "It is now well settled that an agent of a corporation may be appointed, certainly by vote, without the use of a seal, whatever may be the purpose of the agency."

12. Extent of Authority.

42

The comprehensiveness of a special agent's authority is determined by the same principles as in other cases of special agency. Consequently a person who deals with him must recognize his limited authority; and if exceeded, his bank is not bound thereby unless through ratification.43

13. Validity of Contracts in Which Agent is Personally Interested. In making contracts wherein he has a personal interest, they are not void, but may be avoided by the bank within a reason

39 N. E. Mortgage Security Co. v. Addison, 15 Neb. 335. See Philo v. Butterfield, 3 Neb. 256.

40 Olmstead v. N. E. Mortgage Security Co., 11 Neb. 487; Cheney v. Woodruff, 6 Neb. 151.

41 Welch v. Hoover, 5 Cranch C. C. (U. S.) 444; Webb v. Browning, 14 Mo. 354; Bank v. Embury, 33 Barb. (N. Y.) 323.

42 Fitch v. Lewiston Steam Mill Co., 80 Me. 34, 38, citing Bank v. Patterson, 7 Cranch (U. S.) 299; Fleckner v. U. S. Bank, 8 Wheat. (U. S.) 338; Despatch Line of Packets v. Bellamy Mfg. Co., 12 N. H. 205, 231. An agent who is required to produce a sworn copy of his appointment complies by furnishing such a copy even though it does not state that he compared it with the original. Welch v. Hoover, 5 Cranch C. C. (U. S.) 444. 43 Washington Bank v. Lewis, 22 Pick. (Mass.) 24.

able time.44 This is the modern rule applying to nearly all agents.

14. Imputation of His Knowledge to the Bank,

His knowledge concerning the bank's affairs is also, under some conditions, imputed to the institution. If acquired while engaged in serving the bank, his knowledge is clearly imputed 45 if acquired before his service began, by some authorities the principle does not apply.46 The reason is, as he has not charged his mind therewith, very likely the knowledge has faded out. But the better rule is, the knowledge is imputed if it was acquired so closely to the time of his appointment, or was so important that it could hardly have been forgotten.*7 In applying this rule, a bank that employed a person to make a conveyance of land, who knew of a defect in the title, was regarded as having notice of the fact, although the conveyancer's knowledge of the imperfection had been previously acquired.48

"Of course the knowledge must be that of a person who is executing some agency, and not acting merely in some ministerial capacity, as servant or clerk."49 For example, if the con

44 Eastern Bank v. Taylor, 41 Ala. 93, 100.

45 Chap. XI. §6. A borrower from a bank presented collaterals to the assistant cashier, who had authority to represent the bank in the transaction, and directed the borrower in accordance with custom to take the collateral to a note teller having charge of such business to be checked. A notice to the teller of the rights of a third person in one of the securities was notice to the bank. Zeis v. Potter, 44 C. C. A. 665, 670. "To hold that the knowledge of the teller in this instance should not be binding on the bank would be to establish for such institution an effective, but most unreasonable and unfair method of evading just and wholesome responsibility under the law."

46 Houseman v. Girard B. & L. Assn., 81 Pa. 256; Hood v. Fahnestock, 8 Watts (Pa.) 489; Bracken v. Miller, 4 Watts & S. (Pa.) 102; Plympton v. Preston, 4 La. Ann. 356.

47 Fairfield Sav. Bank v. Chase, 72 Me. 226; Hoover v. Wise, 91 U. S. 308, 310; Hart v. Farmers' & Mech. Bank, 33 Vt. 252. See review of cases by Bradley, J., in Distilled Spirits case, 11 Wall (U. S.) 356. A more rigid rule is held in Bank v. Davis, 2 Hill (N. Y.) 451.

48 Fairfield Sav. Bank v. Chase, 72 Me. 226. 49 Ibid.