veyancer "had merely taken the acknowledgment of the deed to the bank, or had transcribed the deed as a clerk or a copyist, such acts would not have enforced a duty to impart his knowledge to the bank."50

Whenever he has acted as an agent for both parties, or as agent of the borrower in transactions with loan companies in making conveyances and like matters, any knowledge, as the agent of the lender, that he might have of imperfections in the conveyance, cannot be imputed to the company.51 Nor will his knowledge concerning a transaction in which he is defrauding his bank be imputed to it.52

15. Effect of His Declarations.

With respect to declarations, whenever they are made within the scope of his authority, they are admissible.53 But when made subsequent to a contract to which they relate, they cannot be admitted against the bank.54 Nor can they be if they were made before the creation of his agency,55

16. Responsibility of Bank for His Conduct.

A bank is responsible for the negligence or misconduct of its agents. Perhaps the reason for the rule has been as forcibly stated by Justice Shepley as by any one. "Why should a corporation or its stockholders be permitted to select unfaithful agents or directors, who, in the exercise of the powers conferred upon them in making contracts or settlements with innocent persons, commit frauds upon the corporation, and then claim to be relieved from the effect of those contracts and settlements and the consequences of their own conduct in the selection of such agents, and to throw their losses, or any part of them, upon the innocent parties, instead of being required to

50 Ibid.

51 Caughman v. Smith, 28 S. C. 143.

52 Shepard & Morse Lumber Co. v. Eldridge, 171 Mass. 516.

53 Spalding v. Bank, 9 Pa. 28.

54 Betts v. Planters' & Merch. Bank, 3 Stew. (Ala.) 18.

55 First Nat. Bank v. Anderson, 28 S. C. 143.

abide by them and being left to obtain redress from their own fraudulent agents."

1956

17. Personal Liability of Agent.

An agent is not personally liable whenever he has exercised ordinary care.57 Nor is he liable for a loss occasioned by his mistake in a doubtful matter of law.58 Nor 58 Nor is he liable for disregarding instructions "in case of extreme necessity arising from unforeseen emergencies," or of impossible performance.59 But he is liable for a palpable mistake or plain violation of instructions in transacting the business of the bank. 60

18. Ratification of His Conduct.

Of course a bank can ratify the unauthorized act of a special agent as though it were the unauthorized act of a regular officer. Such a ratification would be equivalent to original authority, as in the case of natural persons. Nor need the ratification be by formal vote or resolution.61

56 Frankfort Bank v. Johnson, 24 Me. 490, 503.

57 Rechtscherd v. Accommodation Bank, 47 Me. 181.

58 Mechanics' Bank v. Merchants' Bank, 6 Met. (Mass.) 13.

59 Switzer v. Connett, 11 Mo. 88.

60 Clark v. Bank, 17 Pa. 322; Hays v. Stone, 7 Hill (N. Y.) 128; Wilson v. Wilson, 26 Pa. 393.

61 Campbell v. Pope, 96 Mo. 468, 473; First Nat. Bank v. Fricke, 75 Mo. 178, 183.

The knowledge acquired by a bank officer while discharging his duties concerning the bank's business is often imputed to his bank. The law imposes on him the duty to tell, and presumes he has complied with the law.1 This is an extension of one of the great principles of agency; whatever the agent has

I Mechanics' Bank v. Schaumberg, 38 Mo. 228, Maryland Trust Co. v. National Mech. Bank, 63 At. (Md.) 70; Birmingham Trust & Sav. Co., Louisiana Nat. Bank, 99 Ala. 379; Everett v. Bank, 6 Port. (Ala.) 166; Branch Bank v. Steele, 10 Ala. 915; Fall River Union Bank v. Sturtevant, 12 Cush. (Mass.) 372; Gaston v. American Ex. Nat. Bank, 29 N. J. Eq. 98; Gibson v. National Park Bank, 98 N. Y. 87; Village of Port Jervis v. First Nat. Bank, 96 N. Y. 550; Bank v. Davis, 2 Hill (N. Y.) 451; Second Nat. Bank v. Howe, 40 Minn. 390; Bank of St. Marys v. Mumford, 6 Ga. 44; Boggs v. Lancaster Bank, 7 Watts & Serg. (Pa.) 331; Bank v. Penland, 101 Tenn. 445; Bank of America v. McNeil, 10 Bush (Ky.) 54; Duncan v. Jaudon, 15 Wall. (U. S.) 165.

learned concerning his principal's affairs, the principal himself in due time is supposed to know.

Many difficulties have arisen in applying this principle, and especially to corporations. Moreover, these difficulties are thickening with the growing complexity of business.

Whenever this great rule has been applied, a bank has been regarded as having had actual knowledge of that possessed or acquired by its president or cashier concerning the pledge of its stock;2 the trust quality or other peculiarity of stock pledged to the bank;3 the existence of a mortgage or other lien; the endorsement of notes taken by the bank and character of the endorser; the non-payment of an obligation held as owner or collector; the equities between maker and endorser; the residence of an endorser,8 the existence of usury;9 of an agreement or modification thereof to which the bank is a party;10 of letters mailed to, and received by a bank;11 of a legal notice received by or served on the institution.12 New difficulties have arisen in applying this principle growing out of modern conditions of business.

2 Birmingham Trust & Sav. Co. v. Louisiana Nat. Bank, 99 Ala. 379; Bank of America v. McNeil, 10 Bush (Ky.) 54; Curtice v. Crawford Co. Bank, 118 Fed. 390.

3 Duncan v. Jaudon, 15 Wall. (U. S.) 165; Gaston v. American Ex. Bank, 29 N. J. Eq. 98; Shaw v. Spencer, 100 Mass. 382, 389; Porter v. Bank of Rutland, 19 Vt. 410.

4 Trenton Bkg Co. v. Woodruff, 2 N. J. Eq. 117; Ottaquechee Sav. Bank v. Truman, 58 Vt. 166.

5 Fall River Union Bank v. Sturtevant, 12 Cush. (Mass.) 372; Jackson Paper Mfg. Co. v. Commercial Nat. Bank, 199 Ill. 151.

6 Boggs v. Lancaster Bank, 7 Watts & Serg. (Pa.) 331.

7 Bank v. Penland, 101 Tenn. 445; Second Nat. Bank v. Howe, 40 Minn. 390.

8 Central Nat. Bank v. Levin, 6 Mo. App. 543.

9 First Nat. Bank v. Ledbetter, 34 S. W. (Tex. Civ. App.) 1042.

10 Branch Bank v. Steele, 10 Ala. 915; Veasey v. Graham, 17 Ga. 99; Stebbins v. Lardner, 2 S. Dak, 127; Merchants' Nat. Bank v. McAnulty, 31 S. W. (Tex. Civ. App.) 1091.

II

First Nat. Bank v. Fourth Nat. Bank, 6 C. C. A. 183.

12 Village of Port Jervis v. First Nat. Bank, 96 N. Y. 550; Bank of St Marys v. Mumford, 6 Ga. 44.

2. Distinction Between Conclusive and Disputable Presumptions. At the outset a distinction and limitation must be noticed. A distinction must be drawn between disputable and conclusive presumptions. In many cases a presumption is conclusive; the principal is presumed to be endowed with the agent's knowledge, and is not permitted to prove the contrary. The fact may be otherwise, but the law will not permit him to set aside the presumption with evidence, however overwhelming it may be. This position is based on the soundest reasons. The rule itself, which has served a great purpose, might thereby be entirely destroyed. Its application to a particular case may work harshly, but if the principal did not know, the law says he ought to have known; that he alone was to blame, either directly or indirectly if he did not, and therefore he, rather than the public, must suffer, as it certainly would by the destruction of the rule.

But like some other rules, it is artificial and there are occasions on which the courts may hesitate to apply it at all, and other occasions on which the presumption, if introduced, may be set aside by real proof.

3. Limitation When Officer is Personally Interested.

The limitation will now be mentioned. The law regards an officer who is personally interested in a transaction as trying to conceal his knowledge from the bank, because his interest will be better served by maintaining silence. This rule applies to other corporations and principals, as well as banks. Their officers and servants are not supposed to tell about matters in which their personal interest draws the other way.13

13 Leather Manuf. Bank v. Morgan, 117 U. S. 96, 112; Bank of Overton v. Thompson, 56 C. C. A. 554; Third Nat. Bank v. Harrison, 10 Fed. 243; First Nat. Bank v. Gifford, 47 Iowa 575; Wichersham v. Chicago Zinc Co., 18 Kan. 481; Lyne v. Bank, 5 J. J. Marsh. (Ky.) 545; Washington Bank v. Lewis, 22 Pick. (Mass.) 24; National Bank v. Harris, 118 Mass. 147; National Security Bank v. Cushman, 121 Mass. 490; Loring v. Brodie, 134 Mass. 453; Dillaway v. Butler, 135 Mass. 479; Innerarity v. Merchants' Nat. Bank, 139 Mass. 332; Allen v. South Boston R., 150 Mass. 200, 206; Dana v. National Bank, 132 Mass. 156, 158; Gallery v. National Ex. Bank,