(273 F.)

spectively its president and cashier. They, with Robert Grant, vice president, W. E. Grant, teller, and W. D. Grisard, assistant cashier, were its board of directors. Robert Grant lived in California, owned some stock in the bank, and his son, W. E. Grant, owned 10 shares and was paid a salary of $100 to $125 per month, while Mr. Grisard's salary was small, and he and W. E. Grant were minor employés, subject to the control, direction, employment and discharge of C. C. Slaughter, the cashier. W. B. Slaughter went to Texas to live in the early part of 1914. For a year and a half prior to March, 1915, those who sat at and attempted to act as the board of directors of the bank were C. C. Slaughter, W. E. Grant, and W. D. Grisard. No committee or members of the board, other than C. C. Slaughter, made any examination or investigation of the latter's acts or account with the bank during the two years prior to March, 1915, and he alone had and exercised the absolute management and control of its business during that time. So that when, in February, 1915, the transaction to be considered was had, he was for all business purposes the bank itself in all his acts, sayings, and writings as its cashier, which were within the general scope of the powers of a cashier of the bank, or of any other ministerial officer of such a bank. Hence, in a transaction between C. C. Slaughter as the defendant's cashier and other banks and parties, the defendant may not be heard to deny that the acts and knowledge of this cashier, within the scope of the customary and apparent powers of such an of ficer of a bank, were its acts and its knowledge. Auten v. United States Nat. Bank, 174 U. S. 125, 148, 19 Sup. Ct. 628, 43 L. Ed. 920; Rankin v. Tygard, 198 Fed. 795, 802, 119 C. C. A. 591.

[2] Prior to February 6, 1915, M. D. Thatcher was the president, and John H. Werkheiser was and until May, 1917, continued to be, the cashier, of the plaintiff. Mr. Thatcher and other members of his family, who followed his direction and advice, owned practically all the stock of that bank, and he controlled the course of action of these members with reference to their stock and directed the management of the business of that bank. On February 6, 1915, C. C. Slaughter, for himself and his father, W. B. Slaughter, made an agreement to buy from Mr. Thatcher and his associates their stock in that bank. Thereupon the parties proceeded to carry out this agreement of purchase; 460 of the 500 shares of stock of the plaintiff were assigned to W. B Slaughter, and 20 shares of it to C. C. Slaughter; and on February 11, 1915, M. D. Thatcher, president, and John H. Thatcher, vice president thereof, resigned, and W. B. Slaughter was elected president and C. C. Slaughter vice president of the plaintiff. They made a partial payment for the stock of this bank, and in April, 1915, after the transactions to be considered, and after the failure on March 29, 1915, of the defendant, they resigned these positions, and the Thatchers again took control and became the officers of the plaintiff. On February 7, 1915, the day after the sale of the stock of the plaintiff was agreed upon, C. C. Slaughter, over his signature as cashier of the defendant, sent a letter to Mr. Werkheiser as cashier of the plaintiff, which contained these statements and requests:

"I was present yesterday afternoon when Mr. M. D. Thatcher wrote you regarding our purchase of the stock of the First National Bank, which letter I presume you will receive in the next three or four days, and he stated it was up to me to write giving instructions in reference to the future handling of this account. I desire to state, naturally, having become the sole owner of the bank, we are very anxious to obtain any benefits possible out of this purchase. Hence I would request that upon receipt of this letter you transfer all of your account you have in the First National Bank [of Pueblo] to the Mercantile National Bank. * Hence, do this immediately; also draw

your drafts in the future on the Mercantile National Bank. Furthermore, it was the understanding that the last four certificates of deposit of $5,000 you have issued, should be sent to the First National Bank [of Pueblo] and they would pay them, and we would issue our certificates in lieu thereof. Furthermore, about the 21st or 22d of this month you will have another certificate of the First National Bank due, and I would request you send same to us and we will issue our certificate in lieu thereof."

The First National Bank mentioned in this letter was the First National Bank of Pueblo, which had been and was the correspondent in that city of the plaintiff, and had held its commercial paper, promissory notes, and bonds for safe-keeping, collection, and remittance, and its moneys on deposit with the First National Bank of Pueblo subject to the plaintiff's order. When this letter was written the First National Bank of Pueblo held for the plaintiff subject to its checks or drafts. about $30,000, and it was the money in this account that C. C. Slaughter in the letter quoted above requested Werkheiser, the cashier of the plaintiff, to cause to be transferred to the defendant. The plaintiff also held twelve certificates of deposit of the First National of Pueblo, of $5,000 each, representing $60,000, six of which are referred to in that letter. The First National Bank of Pueblo also held commercial paper of the plaintiff aggregating $60,000, copies of which, with the receipts of the First National for the originals, the plaintiff had, and the First National of Pueblo also held bonds to the amount of $97,000, for $87,500 of which the plaintiff held the receipt of the First National. The letter of Mr. Thatcher to Mr. Werkheiser, cashier of the plaintiff, referred to in the letter of Slaughter, as cashier of the defendant, of February 6, 1915, read, so far as it is material here, as follows:

"I have made a sale of the First National Bank of Silverton stock to Mr. W. B. Slaughter. The entire assets of the bank, of every nature, are to be turned over to Mr. W. M. Slaughter, or Mr. C. C. Slaughter, or their representative, whenever they require it."

This letter also contained directions about the transfer of the stock to the Slaughters and the election of new officers. Under date of February 8, 1915, C. C. Slaughter, under the title of cashier of the defendant, wrote Mr. Werkheiser, the cashier of the plaintiff, again to transfer the account of the plaintiff from the First National of Pueblo to the defendant, and added:

"Furthermore, you will also send all receipts and papers that you hold, representing commercial paper that is now held by the First National Bank of Pueblo, aggregating about $60,000, and also the bonds, aggregating something about $90,000, and we will get these papers from the First National Bank and hold same for you, sending the necessary receipts for your files."

(273 F.)

Under date of February 11, 1915, Mr. Werkheiser, as cashier of the plaintiff, wrote a letter in reply to C. C. Slaughter, cashier of the Mercantile National Bank, as follows:

"Dear Sir: We inclose all copies of commercial paper; originals are in the hands of the First National Bank, Pueblo, Colo., belonging to this bank: [Here followed a list of promissory notes, aggregating $60,000.] Kindly acknowledge receipt covering same. We also inclose receipts for bonds and stocks from the First National Bank, Pueblo, as follows: [Here followed a list of bonds, aggregating $97,500.] Kindly send us your receipt for the above, or the bonds, as you prefer."

Albert S. Booth was the vice president of the First National of Pueblo in 1913. He testified that he was aware of the sale of the stock of the plaintiff to W. B. Slaughter and C. C. Slaughter when it was agreed upon on February 6, 1915, and that Mr. Thatcher then told him that he could turn the bonds over to them whenever they called for them, and they would probably want to make the Mercantile National the depository, the same as the First National of Pueblo had been. He testified that the latter bank had been holding the commercial paper, bonds, and other securities of the plaintiff for safe-keeping and collection; that on February 13, 1915, C. C. Slaughter came to his office and said that, as they had purchased an interest in the Silverton Bank, the Mercantile Bank would now take the same place as the First National had with reference to these notes, bonds, and securities; that they had arranged for the transfer of the checking account, and the Mercantile National would then take over the commercial paper, and bonds the First National held for the plaintiff; and that he asked for the commercial paper and securities. He testified that, on this request being made by Slaughter as cashier of the defendant, the latter presented and delivered to him copies of the notes owned by the plaintiff for $60,000, on the backs of which his receipts for the originals to the plaintiff as vice president of the First National Bank of Pueblo were written; that Slaughter as cashier presented to him his receipt to the plaintiff as vice president of the First National for all the bonds, excepting $10,000 of them, which had been purchased after the date of the receipt, wrote on that receipt the words: "Received all of the above bonds. C. C. Slaughter, Cashier"—and in addition receipted for each lot of these bonds and the lot of $10,000 that had been bought after the date of the First National's receipt, upon the books of the First National of Pueblo by writing thereon his signature as cashier opposite each lot of these bonds. Asked on cross-examination what order or authority he had from the First National of Silverton, the plaintiff, to deliver the bonds, he answered, referring to Mr. Thatcher's direction of February 6, 1915, to turn over the account and securities held for the plaintiff to the Slaughters whenever they called for them:

"Well, Mr. Thatcher's order was verbal. At that time his resignation had not taken effect."

He further testified on cross-examination that the plaintiff had changed its account to the defendant when he delivered the bonds; that it was understood that he would deliver them on C. C. Slaughter's request; that the fact that his father, W. B. Slaughter, had purchased

the stock of the plaintiff had some effect; that the facts that C. C. Slaughter and his father had been elected directors of the plaintiff, and respectively president and vice president, "had some right"; that, had it not been for these circumstances, he would not have delivered the bonds to C. C. Slaughter without a written order of some kind; that he considered it sufficient authority from the plaintiff that C. C. Slaughter, its vice president, who had negotiated the deal with Thatcher, asked him to do so; and that if no deal had been made with Mr. Thatcher for the stock, and C. C. Slaughter and his father had not been made officers of the plaintiff, he would not have delivered the bonds to C. C. Slaughter on his receipt as cashier of the defendant.

Under date of February 13, 1915, on the official letter head of the defendant, and over the signature of "C. C. Slaughter, Cashier," the latter wrote Mr. Werkheiser, cashier of the plaintiff :

"I am very much pleased to acknowledge receipt of your favor of February 11th furnishing me a list of the commercial paper now held by your bank which is in the hands of the First National Bank of Pueblo, together with receipt, etc., for which accept my thanks. I desire to state I delivered the receipts to Mr. A. S. Booth this morning, and received in return $55,000 of commercial paper described as follows: [Here followed a list of 11 pieces of this paper, of $5,000 each], and am inclosing copies of the notes which we hold for your account, which you can put in your note case and we will do the necessary towards collecting. I desire to state that the Howe Bros.' note of $5,000 [one of the notes taken over from the First National of Pueblo by Slaughter as cashier of the defendant] was paid, and I received a $5,000 cashier's check, and am crediting your account to-day with proceeds. I also received the bonds you have listed, and am inclosing herewith our receipt for the same, which I believe you will find satisfactory. I would also ask, upon receipt of this letter, you forward the other seven certificates of deposit you hold of the First National Bank of Pueblo, and in lieu of them we will issue our deposits for like amount. We will endeavor to either purchase some commercial paper or give you a good note, and will advise you accordingly sometime next week."

*

Under the same date and over the same signature, "C. C. Slaughter, Cashier," the latter sent to Mr. Werkheiser, as cashier of the plaintiff, a receipt for the bonds in these words:

"Dear Mr. Werkheiser: The following is a list of the bonds we are now holding for safe-keeping for your account, which were turned over to us by the First National Bank this morning: [Here followed a list of the bonds, aggregating $97,500.]"

Under date of March 8, 1915, over the signature of "C. C. Slaughter, Cashier," the latter wrote Mr. Werkheiser, cashier of the plaintiff, among other things:

"Would also advise we received from the Silver City National Bank of Silver City, N. M., $500 on account of bond No. 12 of the town of Silver City [one of the bonds originally held by the First National of Pueblo for the plaintiff), and are crediting your account $512.50, the $12.50 being interest."

Between February 13, 1915, and the failure of the defendant bank on March 29, 1915, on account of the misappropriations and delinquencies of C. C. Slaughter, who fled and has never returned, the defendant collected from the commercial paper of the plaintiff which it received on February 13, 1915, from the First National Bank of Pueblo $35,000,

(273 F.)

and the plaintiff subsequently received back from the receiver of the defendant $25,000 of that paper in kind.

On January 9, 1912, the board of directors of the defendant passed this motion:

"Moved by C. C. Slaughter and seconded by W. D. Grisard that the practice of the bank receiving things of value from its customers for safe-keeping be discontinued, and that all such parties, requesting the bank to keep such things of value, be asked to rent a safety deposit box."

C. C. Slaughter made no record in the books of the defendant of the bonds, amounting to $97,500, of the plaintiff, which he obtained as cashier of the defendant from the First National Bank of Pueblo and none of the other officials of the defendant knew that he had obtained them until after he had pledged all but $10,500 of them on February 20, 1915, to the First National Bank of Kansas City, Mo., to secure the payment of a promissory note of W. B. Slaughter and C. C. Slaughter to that bank for $50,000, with the proceeds of which he bought the controlling interest in the stock of the Alamosa Bank after Slaughter's deal for the purchase of the stock of the plaintiff. There was testimony tending to prove that the signature of W. B. Slaughter to this note and to the letters used to procure this loan from the Kansas City bank was forged. The first of these letters was dated February 15, 1915. Mr. Trotter, an officer of the First National Bank of Pueblo, testified that he had a preliminary talk with C. C. Slaughter about the possible purchase of the interests in the Alamosa Bank, after the deal for the purchase of the stock of the plaintiff, and that the Alamosa deal was a quick one. Search was made for the $10,000 of bonds that were not pledged to the Kansas City bank, but they were never found. Due demand was made by the plaintiff of the defendant and its receiver for the return of all the bonds or the payment of their value before this action was commenced.

The evidence of some of the facts which have been recited was rejected at the trial by the court below, but none of it has been stated or considered which was not, in the opinion of this court, competent and relevant to the issues tried. There was evidence of some other minor facts, but none which are material to the issue whether or not there was error in the direction by the court of the verdict for the defendant. One cannot thoughtfully consider the established facts that C. C. Slaughter was and had been for two years before this transaction the cashier and the active and uncontrolled manager of all the business of the defendant; that as such cashier he requested and obtained from the cashier of the plaintiff its receipts from the First National Bank of Pueblo for the plaintiff's $60,000 of commercial paper and for some $90.000 of bonds; that at, in effect, one and the same time, and as part of the same transaction, by acting, directing, and receipting as such cashier, he procured from the First National Bank of Pueblo the transfer to the defendant bank of this property of the plaintiff, to wit, more than $30,000 of money on deposit to its credit in its checking account, $60,000 on deposit, for which the plaintiff held the certificates of deposit of the First National of Pueblo, and $60,000 of commercial paper, for which it held the receipts of the latter bank; that at the