* these items to resort to any imputation to thus constructively to the directors, and the the bank of knowledge by reason of such bank itself; but that is not all, or the most knowledge being possessed by Layton, or to significant fact. The directors had substanany constructive knowledge on its part by tially surrendered to Layton the performance reason of the negligence of the directors, in of their duties and permitted him to conduct their oversight of the affairs of the bank, the affairs of the bank almost without inwhich the court has found, or to the princi- terference, supervision, or oversight on their ple stated in Fairfield v. Southport National part. They had created a practically oneBank, 80 Conn. 92, 103, 67 Atl. 471, 475, that, man power, and lodged that power in him. "when an agent accepts on his prin- He was thus enabled to carry on his fraudcipal's behalf money belonging to and fraud- ulent operations without their actual knowlulently obtained from another with knowledge. By the exercise of ordinary diligence edge of the fraud, that principal, in treat- on their part they would have obtained ing this money as his own and retaining it knowledge of his irregularities. Such is the as against the true owner, cannot claim as finding. his own the act by which the money was accepted, without also admitting as his own the knowledge with which the act was done"; that "he cannot receive the benefit of the fraud and reject the resulting duty." Town of East Hartford v. American National Bank, 49 Conn. 539, 553. Two transactions involving the use of checks drawn by Layton upon the estate's deposit in the same general course of conduct described require separate attention. January 6, 1906, after the practice already outlined had been persistently pursued for about eight months, a note of the foundry company for $2,000 was received by the bank for collection from one of its correspondents. The company had no funds on deposit with which to pay it, and Layton thereupon drew a check upon the estate's account for the amount of the note, payable to his order as administrator, indorsed it as administrator, delivered it to the teller, and received in return the note. The amount of the check was thereupon in due course charged to the account of the estate and credited to the correspondent. January 15, 1906, a similar transaction was had with respect to a note for $3,000 similarly received. The court declined to permit a recovery of these amounts upon the ground that it did not appear that the bank received any benefit from the transactions, and of this action the plaintiff complains. The principles applicable to the situation here presented are not those appealed to in determining the defendant's inability to charge the payments just discussed against the deposit account of the estate, but they lead to the same conclusion. We are now dealing with two incidents in the long course of a continuous dealing, and they are incidents which occurred after that course of dealing had long been in progress. This course of dealing had been marked by repeated irregularities on the part of the chief executive officer of the defendant in his conduct of the bank, and his repeated and continued wrongful conversion of funds on deposit with it, in the accomplishment of which he had made use of the machinery and agencies of the bank under his control. This fact was, and for months had been, known to the other officers The law requires of directors the exercise of good faith and ordinary diligence and care in the performance of their duties. These duties include that of reasonable oversight and supervision. Briggs v. Spaulding, 141 U. S. 132, 11 Sup. Ct. 924, 35 L. Ed. 662. "Where there is a duty of finding out and knowing, negligent ignorance has the same effect in law as actual knowledge." Thompson on Negligence, § 8; Fishkill Savings Bank v. National Bank, 80 N. Y. 162, 168, 36 Am. Rep. 595. "Directors cannot in justice to those who deal with the bank shut their eyes to what is going on around them. It is their duty to exercise reasonable control and supervision of its officers. * That which they ought by proper diligence to have known as to the general course of business in the bank they must be presumed to have known in any contest between the corporation and those who are justified by the circumstances in dealing with its officers upon the basis of that business." Martin v. Webb, 110 U. S. 7, 15, 3 Sup. Ct. 428, 433, 28 L. Ed. 49. The situation thus presents this condition: The directors, with what in legal contemplation was knowledge of what Layton had been doing through the machinery of the bank and with respect to funds intrusted to it, and being cognizant of their failure in the duty of oversight and control, continued him in his place of authority, continued to give him unrestrained authority, and continued their negligent failure to surround him with the safeguards of their oversight and supervision. He was thus furnished by the directors with the opportunity, the means, and the authority to continue his known irregularities and frauds upon the deposit in question, and to cause any additional frauds thereupon to be successfully consummated. That which was to have been expected, that which the directors must therefore be presumed to have anticipated, happened. Layton kept on abusing his office and his authority therein, and by means of them, through the machinery and organization of the bank, misappropriating the funds of that deposit. The instances now in question were only two out of many. His acts in these transactions are in part, doubtless, to be regarded them may for the purposes of this inquiry the expense of the depositor. National Bank be so regarded. In so far, however, as the of Oshkosh v. Munger, 95 Fed. 87, 95, 36 C. use of the machinery and organization of the C: A. 659. bank was involved, as it was at some point This is not to say that a bank undertakes in all the transactions which are the sub- to supervise and safeguard a trust account ject of the present litigation, Layton, the therein, or comes under the duty of looking. cashier, cannot be eliminated. Upon all such after the appropriation of such funds when occasions he appears upon the scene as a withdrawn. Such is not the law. Gray v. potent figure by reason of his authority to Johnston, L. R. 3 H. L. Cases, 1, 14; Gooddirect the action of the bank and that of his win v. American National Bank, 48 Conn. subordinates and by reason of the influence 550, 555. Neither is it to say that a bank and exercise of that authority. The two is not entitled, at least in the absence of checks, when they were drawn and indorsed, knowledge to the contrary, to presume that contained no direction as to the appropria- a depositor who presents a check in proper tion of the funds represented by them. That form is acting in the course of a lawful exdirection came from Layton when he passed ercise of his rights, or that suspicion on its them to the teller. The act of passing may part that an improper use of the proceeds. be regarded as personal, and so in one as- of a check regularly drawn and presented pect may the accompanying direction; but was intended to be made by the drawer of there remains the significant fact which can- it would justify a refusal to honor it, or not be overlooked, that there went with the that the existence of such a suspicion or direction to his subordinates to give it force reasonable grounds therefor would cast upon and effect the influence and authority of Lay- a bank a duty to investigate as to the cor. ton's official position. Layton, the cashier, rectness of that suspicion. The authorities occupied the point of vantage. His direction are to the contrary. National Bank v. Inreached over into the domain of the opera-surance Co., 104 U. S. 54, 63, 26 L. Ed. 693; tions of the bank. It did not stop at the boundary line of his desires as a depositor. It carried with it a command to a subordinate to deal with the assets of the bank as indicated. When the checks were delivered to the teller with the accompanying direction, they passed into the machinery of the bank over which the cashier was master, and his direction involved one as to the use of that machinery, and it carried with it the authority of the master. When the teller proceeded to carry out his instructions and consummate the wrong, he did so by reason of the existence and exercise of the authority which was over him. The dominating factor of Layton, cashier, was thus present to guide and direct these delicate affairs through the channels of the bank, and to secure silence, acquiescence, and an unquestioning devotion of its methods and instrumentalities to the doing of what was necessary to accomplish the end desired. The situation which made this possible was due to the culpable misconduct of the directors, to whom a large share of the responsibility for it attaches. It thus appears that the two transactions whose resulting loss it is now sought to impose upon the estate's deposit involve as active factors in their accomplishment not only that of the active participation of Layton in his capacity as the managing officer of the bank, but also that of the misconduct of the directors charged with knowledge of what was going on, to which the presence of the first factor is directly traceable, and for which it was directly responsible as stated. As the consequence the bank stands in the position of being an active participant in the attempted misappropriation so directly and to such an extent that the law will not permit it to con Goodwin v. American National Bank, 48 Conn. 550, 557; Walker v. Manhattan Bank (C. C.) 25 Fed. 247, 255; Duckett v. Mechanics Bank, 86 Md. 400, 405, 38 Atl. 983, 39 L. R. A. 84, 63 Am. St. Rep. 513. Neither is it to say that a bank would not be protected in honoring a check regularly drawn and presented by a custodian of trust or other funds not his own, even though it had actual knowledge that such custodian was misappropriating such funds, or that it was not bound to honor it. The authorities are not uniform upon this subject. National Bank v. Insurance Co., 104 U. S. 54, 63, 26L. Ed. 693; Gray v. Johnston, L. R. 3 H. L. Cases, 1, 14; Duckett v. National Mechanics Bank, 86 Md. 400, 405, 38 Atl. 983, 39 L. R. A. 84, 63 Am. St. Rep. 513. We have no occasion to pass upon the questions involved and may well assume, without decision, the correctness of the broad proposition of the most numerous authorities that it would be protected in so doing; but a bank may not actively and knowingly participate in a misappropriation of trust funds. It may not become an active co-operating agency to that end, and by such co-operation directly contribute to the consummation of the wrong. Bank of New Milford v. Town of New Milford, 36 Conn. 93, 101; Smith v. Anderson, 57 Hun (N. Y.) 72, 74, 10 N. Y. Supp. 278; Morse on Banks & Banking, 317. Here lies the defendant's shortcoming. It did something more than passively honor checks duly presented whose proceeds it knew were to be used for a purpose in violation of the trust attached to them. In the ways indicated it lent itself as an active instrument in the fraud accomplished, and potently contributed to the accomplishment of it, so that it will not be two checks cannot therefore be charged against the account upon which they were drawn. sity of its resorting to either of these expedients to save itself from loss, would be distinctly beneficial to it; but the factor of benefit aside, the defendant will not be permitted to avail itself of these attempted transfers of funds from the deposit of the estate to the private account of Layton, and his appropriation of them to his private uses for the reasons hereinbefore stated as applicable to the amount of the two checks. December 29, 1905, Layton drew a check upon the account of the estate in the defendant bank for the sum of $10,000, payable to the Yale National Bank of New Haven, and obtained therefor from the last-named bank a certificate of deposit for that sum. May 7, 1906, he indorsed the certificate and deposited it, together with the accrued interest therein, in said "special account." The amount of the certificate and interest, to wit, $10,140, was in due course paid into the de April 10, 1906, Layton, who already had an account with the bank in his own name, opened another under the name of "Jacob B. Layton, Special Account." This was, and was known to be, his personal account also. On April 24 and May 2, 1906, he drew four checks against it payable to the order of one Reed, who was in some way concerned with the interests of said foundry company, signed them "Jacob B. Layton, Special Account," as cashier certified them payable at the Hanover National Bank, New York, and issued them. The Hanover Bank paid them upon presentation and charged the amounts thereof to the defendant, and the same were allowed in the settlements of account between the banks. At the time these checks were drawn and certified, there were not sufficient funds in the special account | fendant bank. Between May 7 and June to meet them, and they constituted an overdraft of that account to the amount of $13,000. To remedy the shortage thus created, and to provide sufficient funds in the account to meet these checks when presented, Layton, on May 3, 4, and 19, 1906, drew five checks against the estate's account, amounting in all to $14,157.14, and caused them to be credited to said special account. These checks were all drawn to the order of Layton, administrator, and indorsed by him in that capacity. The amounts thus transferred were subsequently used to take up said certified checks. The court held that the bank benefited by these transactions to the extent of the overdraft of $13,000, which was made good by them, and included that sum in its judgment. The defendant contends that the finding that it was benefited as stated is not justified, for the reason that Layton, cashier, could not lawfully certify his own check, and thereby obligate the bank, and that the Hanover Bank took the checks with knowledge of this infirmity apparent upon their face. It has been decided that the general rule of law is as stated. Claflin v. Farmers' & Citizens' Bank, 25 N. Y. 293. But it does not follow that the directions of this defendant to the Hanover Bank, its correspondent, were not such, or the course of dealing between the two banks such, that the apparent obligation assumed by the certification was not a real one. Indeed, the exhibits in this case incidentally disclose the suggestive fact that precisely similar checks had been previously given to the same payee, similarly certified, paid by the Hanover Bank, and accounted for by the defendant; but however successful the defendant might ultimately prove to be in defending a claim made upon these certifications, or in a resort to Layton, it is quite certain that a provision of funds in the "special account" sufficient to meet the certified checks as they 11, 1906, Layton drew checks against the "special account" by which the whole amount of the certificate and interest was appropriated to his own uses. It does not appear in whose names the certificate was issued. It is scarcely to be believed that the depositary, having received a check purporting to be drawn upon the funds of an estate, would issue therefor a certificate indicating any other ownership; but the finding does not furnish definite information. In the absence of this information, nothing appears upon the record which would indicate to the officers of the bank, other than Layton, that the funds represented by the certificate were the property of the Lowndes estate; but Layton did know. He knew the ownership of the funds when they passed into the hands of the bank, during all the time that they remained there, and when they were being paid out. Whatever knowledge he had in that respect, although acquired in his individual capacity, under the circumstances of this case, he carried over with him into the exercise of his duties and powers as cashier. He carried it with him into every transaction in which the bank participated through him. In re Carew's Estate, 26 Beav. 39, 46; New York & N. H. R. Co. v. Schuyler, 34 N. Y. 30, 84; Holden v. New York & E. R. Co., 72 N. Y. 286; Loring v. Brodie, 134 Mass. 453, 458. This knowledge being thus supplied, we have a situation precisely similar to that already discussed, with the result that the court was in error in not embracing this amount of $10,140 in its judgment. June 24, 1906, Layton drew a check for $2,000, payable to himself, upon the estate's account, and the amount thereof was paid to him. The purposes for which the money was used are unknown. It does not appear that any of this money was misappropriated, and it was not the duty of the bank to see that it was rightfully appropriated. The OBSTRUCTION OF ton, individually, was not irregular upon its | 2. RAILROADS (8 254*) to impose a fixed sum as damages upon a rail- Two rulings upon the admission of testimony are claimed to have been erroneous. Both concerned matters not material to our conclusions and were harmless even if incorrect. There is error upon the plaintiffs' appeal, and no error upon the defendant's. The judgment is set aside, and the cause remanded for the rendition of a judgment in favor of the plaintiff for the principal sum of $56,140, together with interest thereon from September 11, 1906, to the date of judgment. The other Judges concur. INGS STATUTES. Pub. Acts 1866, p. 87, c. 99. imposed a forfeiture of not exceeding $10, to be recovered by any common informer, upon any railroad company which, "whenever it shall be necessary for any freight train" to remain at a station in such a position as to obstruct a highway crossing for more than five minutes, should not separate the cars so as to let travelers pass. Pub. Acts 1878, p. 346, c. 135, replaced the former act, giving to a traveler upon a public street whose passage over a railroad crossing was obstructed for more than five minutes by reason of trains, cars, or locomotive, standing upon the street, the right to recover $50 from the railroad company. By subsequent legislation (Pub. Acts 1893, p. 402, c. 250 [Gen. St. 1902, § 2039], and Pub. Acts 1903, p. 5, c. 4) the amount of the penalty was changed. Pub. Acts 1881, p. 80. c. 135 (Gen. St. 1902, § 2040), provides that a highway grade crossing, in any city, within 200 feet of a covered bridge in the highway, shall not be obstructed by the making up of railroad trains, nor by allowing any train, car, or locomotive to stand on or across said highway for more than three minutes at any one time, under a penalty. Pub. Acts 1883, p. 269, c. 80 (page 283, c. 106), substantially reproduced in Gen. St. 1902, §§ 3891, 3893, empowers the railroad commissioners to order any railroad company not to use for switching purposes, nor for standing trains, any specified highway crossing, if they might deem it inconsistent with public convenience, etc. Held, that the Legislature have had in mind two evils to be guarded against in the use of highway crossings by railroads, their obstruction by standing cars and by moving cars (Gen. St. 1902, § 2040; Pub. Acts 1881, p. 80, c. 135); sections 3891, 3893, providing a remedy for both the evils, and section 2039, Pub. Acts 1893, p. 402, c. 250, a remedy for the first. [Ed. Note. For other cases, see Railroads, Dec. Dig. & 246.*] [Ed. Note.-For other cases, see Railroads, Cent. Dig. § 764; Dec. Dig. § 254.*] 3. RAILROADS (§ 254*)-OBSTRUCTING CROSSINGS- PENALTIES STATUTES CONSTRUC TION. Gen. St. 1902, § 2039. as amended by Pub. Acts 1903, p. 5, c. 4, providing that any traveler upon a public street or highway whose passage over a railroad crossing is obstructed for more than five minutes by trains, cars, or locomotives standing upon the street or highway, may recover $25 and costs from the railroad company, approaches closely to the field of penal statutes, and must be construed with reasonable strictwhat is called for by the ordinary import of ness, so as not to extend its operation beyond its terms. [Ed. Note. For other cases, see Railroads, Cent. Dig. § 765; Dec. Dig. § 254.*] 4. RAILROADS (§ 254*)-OBSTRUCTING CROSSINGS-WHAT CONSTITUTES OBSTRUCTION. Gen. St. 1902, § 2039, as amended by Pub. Acts 1903, p. 5, c. 4, allowing a recovery only where the crossing is obstructed by standing cars, and not by moving cars, a recovery could not be had thereunder where there was no evidence that cars stood across the street without moving for more than 5 minutes, but only that plaintiff was prevented from crossing for 11 minutes because the crossing was occupied by a freight train; the cars standing part of the time and being switched backward and forward the rest of the time. [Ed. Note. For other cases, see Railroads, Dec. Dig. § 254.*] 5. TRIAL (§ 396*)-TRIAL BY COURT-FINDINGS NOT SUPPORTED BY EVIDENCE. For the court to determine an issue in plaintiff's favor without any evidence to establish the fact in controversy is an error in law. [Ed. Note. For other cases, see Trial, Cent. Dig. 88 935-938; Dec. Dig. § 396.*] 6. ACTION (8 56*)-CONSOLIDATION-DISCRETION OF COURT. A motion to consolidate actions is addressed to the discretion of the court; and, where the sole ground for the motion involved a construc tion of Gen. St. 1902, § 2039, as amended by Pub. Acts 1903, p. 5, c. 4, providing a penalty for the obstructing of a crossing by a railroad company, to be recovered by a traveler detained, as to the liability of the defendant for more detained by the same obstruction, and invited than one penalty where several travelers were the consideration of a question of constitutional law, the court acted within its discretion in denying the motion. [Ed. Note.-For other cases, see Action, Cent. Dig. §§ 624-631; Dec. Dig. § 56.*] 7. RAILROADS (254*) OBSTRUCTION OF CROSSINGS STATUTORY PENALTIES - PERSONS ENTITLED. If Gen. St. 1902, § 2039, as amended by Pub. Acts 1903, p. 5, c. 4, providing a penalty of $25 and costs for the obstructing of a railway crossing for more than 5 minutes by a railroad company, to be recovered by a traveler thus prevented from passing, inflicts on such a railroad company only a liability of $25 and costs for a single offense, regardless of the number of travelers detained, the first one to sue 8. PLEADING (§ 182*) - ANSWER EFFECT OF FAILURE TO FILE REPLY. Where no reply is filed, the truth of matters alleged in the answer is admitted. [Ed. Note.-For other cases, see Pleading, Cent. Dig. 388; Dec. Dig. § 182.*] 9. RAILROADS (§ 254*)-OBSTRUCTION-PRIORITY OF ACTIONS COMMENCED AT SAME TIME. Where several actions for a penalty against a railroad company for a single obstruction of a crossing are commenced simultaneously, the writs therein being returned at the same time, there is no priority, and each of the plaintiffs may push for the first opportunity to be heard. [Ed. Note. For other cases, see Railroads, Dec. Dig. § 254.*] changed to $10 and costs (Gen. St. 1902, § 2039), and by an act, entitled "An act conrailroad cars," passed in 1903 (Pub. Acts cerning damages for obstructing streets with 1903, p. 5, c. 4), it was changed again to $25 and costs. An act was passed in 1881 (Pub. Acts 1881, p. 80, c. 135), and is now in force (Gen. St. 1902, § 2040), providing that a highway crossing at grade in any city, within 200 feet of a covered bridge in the highway, shall not be obstructed "by the making up of railroad trains, nor by allowing any train, car, or locomotive to stand on or across said highway," for more than 3 minutes at any one time, under a penalty of fine or imprisonment, or both. In 1883 the railroad commissioners were empowered to order any railroad company "not to use for switching pur 10. ABATEMENT AND REVIVAL (8 17*)-PEN-poses, nor for standing trains of any kind," DENCY OF OTHER SUITS-MODE OF OBJECTION. Where the pendency of other suits is not pleaded in abatement, the defense cannot be made by answer. [Ed. Note. For other cases, see Abatement and Revival, Cent. Dig. $8 123-136; Dec. Dig. 17;* Pleading, Cent. Dig. § 427.] any specified highway crossing, such use of which they might deem inconsistent with public convenience (Pub. Acts 1883, p. 269, c. 80; page 283, c. 106), and to make orders "regulating the obstruction of streets and highways by railroad locomotives and cars, and generally to make any and all orders regarding the 11. RAILROADS (§ 254*)-OBSTRUCTING CROSS-Crossing of streets and highways by railroad ING "TRAVELER UPON A PUBLIC STREET." A passenger on a street car is a "traveler upon a public street," within Gen. St. 1902, & 2039, as amended by Pub. St. 1903, p. 5, c. 4, providing a penalty for the obstructing of a railway crossing by a railroad company, to be recovered by any traveler upon a public street whose passage was obstructed. [Ed. Note. For other cases, see Railroads, Dec. Dig. 254.*] locomotives and cars, that the public may be inconvenienced as little as possible thereby." These provisions are substantially reproduced in Gen. St. 1902, §§ 3891, 3893. It is plain from this course of legislation that the General Assembly have had in mind two evils to be guarded against in the use of a highway crossing in the operation of railAppeal from City Court of Waterbury; roads. One was its obstruction by standing Frederick M. Peasley, Judge. cars or trains; the other its obstruction by Action by Joseph Tracy against the New moving cars or trains. Gen. St. 1902, §§ 2040, York, New Haven & Hartford Railroad Com-3891, 3893, provide a remedy for both these pany. Judgment for plaintiff, and defendant evils. Gen. St. 1902, § 2039 (as amended in appeals. Reversed, and new trial ordered. Benjamin I. Spock and James E. Wheeler, for appellant. Charles W. Banby and Philip N. Bernstein, for appellee. 1903) provides a remedy for but one of them. This action is brought under section 2039, and the only obstruction to travel upon the street which is alleged is one "by reason of cars, trains, and locomotives of defendant standing upon and across said street." The finding shows that the plaintiff was a passenger on a street car, which was prevented for 11 minutes from crossing the defendant's tracks because they were occupied by a freight train, that part of the time the cars were standing still, and the rest of the time they were being switched backward and forward, but that there was no evidence that cars stood, without moving, upon or across the street for more than 5 minutes. BALDWIN, C. J. By an act passed in 1866 a forfeiture of not exceeding $10, to be recovered by any common informer, was imposed upon any railroad company which, "whenever it shall be necessary for any freight train" to remain at a station in such a position as to obstruct a highway crossing for more than 5 minutes, should not separate the cars so as to let travelers pass. Pub. Acts 1866, p. 87, c. 99. In 1878 this was replaced by an act providing that any traveler upon a public street or highway, whose pasThe statute is a remedial one, but the remesage over a railroad crossing was obstructed dy furnished is the right of any traveler, for more than 5 minutes, "by reason of trains, whose passage has been obstructed in the cars, or locomotives, standing upon or across manner specified, to recover a fixed sum as such street or highway," might recover not damages, irrespective of what damages he exceeding $50 from the corporation owning may in fact have suffered. It was within the railroad. Pub. Acts 1878, p. 346, c. 135. the power of the Legislature to impose such By an amendment made in 1893 (Pub. Acts a liability upon railroad companies. When 1893, p. 402, c. 250) the sum recoverable was they are permitted to cross highways at |