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same time and as a part of the same transaction, by receipting for them as cashier of the defendant, he obtained and carried away the $60,000 of commercial paper from the First National of Pueblo and $97,000 of the plaintiff's bonds; that the defendant bank received and used the moneys on deposit, collected $30,000 of the commercial paper, and derived the benefit of the use of all these funds—one cannot contemplate these facts without finding great difficulty in resisting the conclusion that there was substantial evidence in this case that by these acts of its cashier the defendant was estopped from denying that these bonds were deposited with and accepted by it for safe-keeping and collection, as were the plaintiff's other securities.
Counsel for the defendant, however, have forcibly and persuasively argued in opposition to this conclusion. One of their contentions is that, at the time the bonds were delivered to C. C. Slaughter as cashier of the defendant, he was also the vice president of the plaintiff, and he and his father owned its stock, and that it was by virtue of his authority as such vice president, and as the representative of himself and his father, that he caused the bonds to be taken from the First National of Pueblo, delivered to himself as cashier of the defendant, and misappropriated. In support of this argument they cite the testimony of. Mr. Booth that, after the contract for the sale of the plaintiff's stock, Mr. Thatcher told him thereof and instructed him to turn over the account and securities of the plaintiff in the First National of Pueblo to the Slaughters, and that if no deal for the sale of the stock had been made, and if C. C. Slaughter had not been made vice president and W. B. Slaughter president of the plaintiff, he would not have delivered the bonds to C. C. Slaughter as cashier of the defendant on his receipt as such, and that when C. C. Slaughter, the vice president of the plaintiff, who had negotiated the purchase of the plaintiff's stock requested him to deliver the bonds, he considered that request sufficient authority to warrant him in so doing. But there is no evidence in the record that C. C. Slaughter ever claimed to exercise or did exercise any authority or power as vice president of the plaintiff in getting these bonds into his possession as cashier of the defendant. Booth testified that Thatcher told him before he ceased to be president to turn over all the securities and the account to the Slaughters when they called for them; that when C. C. Slaughter came for them he said, “We have taken one of your accounts away from you—the Mercantile has taken it away"; and that the Mercantile would now take the place and hold the bonds for the First National Bank of Silverton, just the same as the First National Bank of Pueblo had held them for the First National Bank of Silverton.
Moreover, the question here is not by what authority did Slaughter, as cashier of the defendant, get the bonds. No one questions his right to their possession as its cashier. He never asked or pretended to receive them in any other capacity, and the question here is: In what capacity did he take or hold them? Was it as agent and representative of himself and W. B. Slaughter individually, was it as vice president of the plaintiff, or was it as cashier of the defendant? The letters and receipts show on their faces, and the testimony of the witnesses is, that
(273 F.) it was as cashier of the defendant, and no writing or testimony has been discovered to the effect that at the time of the transaction C. C. Slaughter, or any one connected with the transaction, claimed or conceived the idea that he asked for, took, received, or receipted for either the bonds, the commercial paper, the certificates of deposit, or the moneys in the checking account in any other capacity. The fact that he took from the First National Bank of Pueblo the moneys in the plaintiff's checking account, the certificates of deposit issued by the First National Bank, and the commercial paper as cashier for the defendant bank is competent and persuasive evidence to the same effect. This case is as one would have been if, after receiving as cashier of the defendant and carrying away the pieces of commercial paper, he had subsequently appropriated one of them to his own use while the others were accounted for by the bank. The truth is that the agreement of sale of the stock was single, the request for the transfer of all the property of the plaintiff in the possession of the First National of Pueblo and the grant of that request constituted one transaction, and evidence of the treatment of every part of that property is competent and persuasive upon the issue of the capacity in which C. C. Slaughter received and accepted every other part of it.
Another contention of counsel for the defendant is that, even if C. C. Slaughter received and accepted the bonds for the defendant as its cashier, yet since he was during this time the vice president of the plaintiff, and as such had authority to take for the plaintiff the bonds, the other securities, and the moneys from the defendant bank and its cashier, it was as vice president of the plaintiff, and not as cashier of the defendant, or as an individual, that after he had taken them from the First National Bank he appropriated them to the use of himself and his father. But no evidence has been discovered in this record that Slaughter ever exercised his authority as vice president of the plaintiff to do or ever committed any such act, nor can we find any evidence that he or any of the parties in interest ever claimed or thought of his so doing before this suit was commenced.
Counsel contend that since the other officers of the defendant did not know that Slaughter, as its cashier, had received, accepted, and receipted for the bonds as a part of the property of the plaintiff held by the First National of Pueblo and turned over to it, and as no entry of the bonds was made on the books of the defendant, and it never received any of the proceeds thereof, except $500, the knowledge of its cashier that they were obtained and receipted for by Slaughter for the bank was not imputable to it, and consequently it was not estopped from denying the receipt or acceptance of the bonds for safe-keeping or collection by Slaughter's acts. In support of this position they cite and the court has examined American Surety Co. v. Pauly, 170 U. S. 133, 156, 18 Sup. Ct. 552, 42 L. Ed. 977; American National Bank of Nashville v. Miller, 229 U. S. 517, 33 Sup. Ct. 883, 57 L. Ed. 1310; Bank of Overton v. Thompson (8th C. C. A.) 118 Fed. 798, 800, 56 C. C. A. 554; Central Coal & Coke Co. v. Géo. S. Good Co. (8th C. C. A.) 120 Fed. 793,798, 57 C. C. A. 161; Mulrooney v. Royal Ins. Co. (8th C. C. A.) 163 Fed. 833, 835, 90 C. C. A. 317;
Interstate Nat. Bank v. Yates Center Nat. Bank (8th C. C. A.) 245 Fed. 294, 157 C. C. A. 486; School District v. De Weese (C. C.) 100 Fed. 705; Gunster v. Scranton Illuminating Heat & Power Co., 181 Pa. 327, 37 Atl. 550, 59 Am. St. Rep. 650. In American Surety Co. v. Pauly, the president of a bank certified to the honesty and integrity of a Mr. O'Brien, and a surety company in reliance upon that certificate signed his bond, and the court held that the bank was not liable to the surety company, because the making of such a certificate was not within the scope of the power or duties of the president of a bank. But surely the acceptance and receipt by the cashier of a bank of the moneys on deposit, commercial paper and bonds of another bank for safekeeping and collection, are not beyond the general scope of the powers of such a cashier.
In School District v. De Weese (C. C.) 100 Fed. 705, 708, 709, the cashier of a Sedalia bank, as agent of a school district, sold some new bonds it had issued to pay off old bonds, paid the proceeds of the sale for and took up the old bonds, but did not cancel them, and sold the old bonds again, and placed the proceeds to the credit of his bank with its Eastern correspondent, and as soon as this was done placed these proceeds to his own individual credit in his account with his bank. The court held that because, from the time this cashier wrongfully sold the old bonds, which he ought to have canceled, he evidently had the intention to steal or appropriate them and their proceeds, that he was from that time acting in his own interest adversely to that of his bank, and that consequently his knowledge that the old bonds and the proceeds thereof were the property of the school district was not imputable to that bank. This and the other authorities cited rest on the exception to the general rule that the knowledge of and notice to the agent is the knowledge of and notice to his principal which arises when the agent is shown to have been acting in a transaction adversely to his principal for himself and in his own interest.
The evidence in this case does not bring it under this exception because no substantial evidence has been found that before or at the time the bonds, the other securities, and the deposits were received and accepted by C. C. Slaughter as cashier of the defendant, and that transaction was finally closed on February 13, 1915, Slaughter was ever acting in his own interest adversely to the bank, and there is very persuasive, if not conclusive, evidence that he was not so acting in the transaction. If he had been, he could easily have appropriated to himself the $30,000 in the checking account or the $60,000 represented by the certificates of deposit, without the delay, labor, and inconvenience of procuring the loan of the Kansas City bank. The legal presumption is that in this transaction he was acting honestly and faithfully until it was completely closed, and that he did not conceive the intention to misappropriate any of this property until some days after the property was delivered to him on February 13, 1915. The testimony accords with the presumption and his knowledge of that transaction must be imputed to the defendant, and it is thereby estopped from denying that it received and accepted the bonds from the plaintiff for its account (Lerch v. Bard, 162 Pa. 307, 29 Atl. 890, 893, 894), at the time of this transaction.
(273 F.) And since the plaintiff had the right to rely on the general rules that the cashier of a bank has greater inherent power than any other officer thereof and is ordinarily its active manager and agent, that, while those who deal with him as cashier are presumed to know the extent of his general powers, a limitation thereof is not binding on those who are not cognizant thereof (7 C. J. § 160), that he is held out to the public as having authority to act according to the general usage, practice, and course of business conducted by such institutions, and generally evidence of such usages, practice, and course of business is competent and admissible, that his acts within the scope of such usage, practice, and course of business will generally bind the plaintiff in favor of third persons, and that those dealing with a bank have a right to presume integrity on the part of its cashier when acting within the apparent sphere of his duties, and the bank is bound accordingly, the legal presumption is that a cashier, performing his functions within the scope of the powers of the bank, acted in his official capacity rather than in an individual one, and for the interest of the bank rather than adversely to it and for his own and other interests. When all the evidence in this case is considered in the light of these familiar rules, the conclusion is unavoidable that it was such that, if it had been submitted to the jury under proper instructions and they had returned a verdict for the plaintiff, it would not have been the duty of the court below to set it aside, and it was such that reasonable men in the exercise of an honest and impartial judgment of the evidence might well conclude that the plaintiff was entitled to a recovery.
Referring. now, as briefly as convenient, to some other questions than the sufficiency of the evidence to sustain a verdict for the plaintiff, these conclusions have been reached :
31 The absence of knowledge of the other officials of the bank of the receipt and acceptance of the bonds, the failure of C. C. Slaughter to record the bonds in the books of the bank, and the failure of the defendant to derive benefit from the bonds because its cashier, after his receipt and acceptance of them for the defendant, unlawfully appropriated them to his own use, did not revoke his authority to receive them for it or relieve it from its liability to account for them to the plaintiff.
The fact that the receipt of "C. C. Slaughter, Cashier," dated February 13, 1915, read, "The following is a list of the bonds we are now holding for safe-keeping for your account,” did not render other written evidence or parci evidence inadmissible to show, or estop court or jury from finding upon convincing and competent evidence, that the taking by the defendant at the same time of all the moneys and securities formerly held by the First National Bank of Pueblo, including the bonds, was for safe-keeping and collection, and that the bailment was not gratuitous.
The motion adopted by the board of directors of the defendant, to the effect that the bank should discontinue holding articles of value for customers and should request them to take safety deposit boxes, did not restrict or limit the authority of Slaughter as cashier to receive
and accept for the defendant the moneys and securities taken from the First National of Pueblo.
Evidence of the negligence of the defendant, if any, prior to February 13, 1915, in failing to employ one as cashier fit in ability, character, integrity, and habits, or in retaining one unfit to discharge the responsible duties of that office, in failing to examine with proper care and frequency his accounts and acts with and for the bank, to discover in him a character, acts, or habits that disqualified him for such an office, was competent in rebuttal on the trial of this action below, and doubtless will be competent at the trial to come. Preston v. Prather, 137 U. S. 610, 611, 11 Sup. Ct. 162, 34 L. Ed. 788.
In case the defendant claims in the next trial that C. C. Slaughter took the bonds, or any of them, from the defendant after February 13, 1915, in the capacity of vice president of the plaintiff, the receipt of the Bankers' Trust Company of February 15, 1915, will be material and competent evidence as to that claim. The silence of the court upon questions presented upon which no decision is announced does not indicate any opinion of the court upon them.
Let the judgment below be reversed, and let the case be remanded to the court below, with instructions to grant a new trial.
ATCHISON, T. & S. F. RY. CO. v. MERCHANTS' LIVE STOCK CO.
(Circuit Court of Appeals, Eighth Circuit. May 7, 1921.)
1. Carriers ww211—Duty of caretakers to care for stock at feed stations.
Under the provision of Twenty-Eight Hour Law, $ 2 (Comp. St. $ 8652), that "animals so unloaded shall be properly fed and watered during such rest either by the owner or person having the custody thereof, or in case of his default in so doing then by the railroad
*. at the reasonable expense of the owner or person in custody thereof," where the carrier furnishes free transportation to caretakers for a shipment of stock, as permitted by law, it is primarily their duty as matter of law to unload, care for, and reload the stock at rest stations, and the refusal of the caretakers to perform such duty or to assist therein is matter of defense in an action against the carrier for loss of stock alleged to have been due to the improper and unskillful manner in which the stock was handled and reloaded by its employés, especially where the bills of lading expressly provided that it should not be liable for any loss, damage, or
delay due to the act or default of the shipper or his agents 2. Carriers C.228 (3)—Evidence held incompetent in action for loss of stock.
On an issue as to liability of a railroad company for loss and damage to stock in shipment, alleged to have been due to improper handling and delay in the transportation, evidence that another shipment a month later went through in two days' less time and with much smaller loss, without showing the comparative condition of the cattle, the conditions under which the shipments were made, or whether the time made was usual or unusual, held incompetent, as introducing collateral and irrelevant
issues. In Error to the District Court of the United States for the District of New Mexico; Colin Neblett, Judge. PmFor other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes