longing or pledged to the bank, to know by what title and in what capacity the bank holds the various items, and to keep them duly ear-marked. On the other hand, it can never be pretended that he has any incidental powers to bind the bank by declarations or admissions which are made beyond the scope of his duties. Thus, his statement or promise given to a person who is about to put his name as indorser upon a note which the bank has agreed to discount, to the effect that such person will not be held liable, or shall not be looked to by the bank, is altogether inoperative and void as an undertaking of the bank. For so far as the business of discounting is concerned, the cashier's sole power and function is to pay over the money upon the discounted notes. Collateral contracts or agreements of any nature are altogether beyond the range of his employment. Declarations or admissions in the nature of such contracts are equally beyond his province, and consequently equally valueless with the contracts themselves.3 No authority to answer questions as to the genu ineness of paper, ex (a) Payment made by the cashier upon a check bearing the forged name of a depositor, or by way of redeeming bills or notes falsely purporting to be those of the bank, is the payment of the bank. It is an act within the scope of the cashier's authority, and cannot subsequently be either recalled or repudiated. He is intrusted by the bank with the duty of deciding upon the genuineness of such paper when it is presented for payment or redemption. But if such paper is shown to him, not for the purpose of demanding payment thereon, but simply to inquire whether or not it be genuine, his erroneous answer that it is so will not bind the bank as an admission. For it is not his function to give such information. The bank does not intend that he should do so, or hold him out as competent to do so. When payment is cept by the acts of payment or cer tification. But see be low. 3 Bank of the Metropolis v. Jones, 8 Pet. 12; Bank of the United States v. Dunn, 6 id. 51; Harrisburg Bank v. Tyler, 3 Watts & S. (Pa.) 373; Merchants' Bank v. Marine Bank, 3 Gill (Md.), 96; Cochecho National Bank v. Haskell, 51 N. H. 116; Goodbar v. National Bank, 78 Tex. 461 (14 S. W. 851) (1890). demanded, it is an inevitable necessity that some officer should decide whether or not the paper is what it purports to be, and this necessity the bank can in no way avoid, without destroying the possibility of banking business. But to answer all questions which may be put concerning the genuineness of the paper is quite another thing. The same necessity does not exist for this, and the bank is accordingly presumed to refuse altogether to assume gratuitously a task of such dangerous responsibility. Therefore, if the cashier undertakes to answer such interrogatories, his act is wholly beyond the scope of any authority given him by the bank, and ought to be known by all persons to be so. The declaration is impotent to conclude the bank. Practically, if it were allowed binding force, it would amount to allowing the cashier to give a valid promise on behalf of the bank to pay what the bank does not in fact owe; a power which even the directors could rightfully exercise only in extraordinary cases, if ever. The difference between a payment actually made, though by mistake, and an executory agreement to pay, or acknowledgment of the sufficiency of the order calling for payment, made under the same mistake, is certainly wide enough to admit of this corresponding difference in the respective validity of the two acts.1 Representation as to genuineness (b) If a party presents a check drawn on a bank to its cashier for information, and the cashier says it is "good," the bank is hound by such answer as to held binding the genuineness of the drawer's signature, and as U. S. S. C. to the sufficiency of his funds, but not as to the genuineness of the filling in.5 And it is bound in spite of the fact that the cashier knew there were no funds, if the party to whom he makes the assertion has no notice of its falsity. It is part of the cashier's 4 Bank of the United States v. Bank of Georgia, 10 Wheat. 333; Salem Bank v. Gloucester Bank, 17 Mass. 1; Merchants' Bank v. Marine Bank, 3 Gill (Md.), 96; Farmers & Mechanics' Bank v. Troy City Bank, 1 Dougl. (Mich.) 457. 5 Epsy v. Bank of Cincinnati, 18 Wall. 604 (U. S.) Farmers & Mechanics' Bank v. Butchers & Drovers' Bank, 16 N. Y. 125; Credit Co. v. Howe Co., 54 Conn. 357 (1887). business to give information to checkholders as to the funds of the drawer. And the admission by a cashier that there are funds in the bank sufficient to pay a check is binding on the bank.6a as to a past transaction courtesies, unless they present or are mere bear on a future deal ing in which the bank is a factor. (c) In the case of Franklin Bank v. Stewart, an interesting point in this subject is discussed, which cannot be better elucidated than by presenting a brief summary of the Statements remarks of the court. Statements, it was said, concerning a past transaction are given purely as a matter of courtesy. No one has a legal right to demand them. Consequently, a cashier in making them does not make them in an official character, or as an agent of the bank authorized to bind it by them. The most that can be said is that the bank does not forbid him to do an act of ordinary courtesy; but it is equally far from empowering him to impress upon that act any other and more serious character. In Bank of Monroe v. Field, admissions as to the fact of payment having been made upon a note, were held admissible as constituting a part of the res gestæ, but upon the express ground that they were shown to have been made upon, and as the result of, a contemporaneous examination of the books of the bank undertaken for this very purpose. But if the statement, though it concern a past transaction, is connected with a present dealing, the reason of the rule fails, and the rule itself shifts to the opposite doctrine. The test is well given in the following remark of Sir William Grant, in the cause of Fairlie v. Hastings: 9 "Unless the agent's statements constitute the actual agreement of the principal, or are the foundation of or inducement 6a Simmons v. Bank, 41 S. C. 177 (19 S. E. 502) (1893). But where the cashier states it as his opinion that the bank will honor a check, drawn by one who in fact has no funds in the bank, it is not such an unconditional promise as to lead one to accept the check from the maker. And, the maker having no funds in the bank, it is a debt of another, which, being oral, is void within the Nichols v. Bank, 55 Mo. App. 81. promise to pay the Statute of Frauds. 7 37 Me. 519. 82 Hill (N. Y.), 445. 910 Ves. 123. To the same point, see Lime Rock Bank v. Hewett, 52 Me. 531. to that agreement, they are mere naked assertions, not proofs, of the fact; and being such, they amount to nothing." The facts of Franklin Bank v. Stewart were these: A messenger was sent to the bank to inquire whether a certain note had been paid. He did not tell the cashier that he was asking on behalf of any party to the note; it did not appear that the cashier examined the file of notes, or any of the books of the bank. But he answered that it had been paid. In truth it had never been paid, and at that moment still lay among the uncancelled notes of the bank. Upon the strength of the principles above propounded, the court held that the bank was not bound by this statement of its cashier, and this even though it was shown that a surety on the note, relying on that statement, had given up security which he held from the principal promisor. The surety had taken imperfect means to acquire the knowledge he desired, and his loss was only a natural result of his insufficient thoroughness in the transaction. The opinion delivered by Shepley, C. J., is learned and able, but two members of the bench found reasons for dissenting from the decision of their comrades. In any suit between the bank and that surety on that note, the plain principles of justice would estop the bank, and make it responsible for all loss occasioned to the surety by such a representation. The cashier has charge of the collection of notes; he receives payments; and on what could the surety rely, or any person having dealings with a bank, if not on such a declaration as this? The following cases seem far nearer the true doctrine. See also Certification. In Nebraska it has been held that, where a surety on a note is erroneously told by the cashier at the bank that the note has been paid, and upon the strength of this statement becomes surety upon another note of the same maker, the bank will not be able to recover on this second note. It does not appear in this case that the cashier knew the precise object with which the inquiries were made; but he obviously had reason to suppose that they were not made altogether idly, or without purpose.10 10 Merchants' Bank v. Rudolf, 5 Neb. 527. note held Representation as to payment of note may bind bank, even though the adverse interunknown to officer had an est, if this is the third (d) The bank must answer for loss resulting from declarations of its cashier to an indorsee as to payment of a by the bank, and the fact that the cashier was also an indorser does not alter the case. The cashier's declarations in the business of the bank and pertinent to it are admissible against it. The bank claimed that, as the cashier was an indorser, his interest was adverse to that of the bank, and therefore his representations did not bind it; but the court said that releasing an indorser by his statement was exactly contrary to his own interest as an indorser, as it destroyed his right of contribution from such person, and, even if his interest were antagonistic to that of the bank in the matter, the bank would still have been liable; for the directors knew, or were bound to know, who were the parties on the note, and if they allowed the cashier to stand where he had an interest to, and where he could and did, cause loss by false statements about the note, it would seem no reason to throw the loss on the innocent misled indorser.11 party. (f) The cashier wrote to the Secretary of the Treasury that the bearer was authorized to contract for the transfer of money; such a contract was beyond the scope of a cashier's Representaoffice, and therefore his representations did not from the bind the bank, and it did not have to make good the money advanced to the "bearer." 12 tions aside cashier's Scope of duty. A., the cashier of a bank, was asked by C. about the solvency of a certain firm, F.; he replied favorably. C. bought large amounts of the bills and acceptances of F. F. failed, and C. sued A. and the bank. The court said that the bank could not be held, for it was no part of the cashier's business to give such information; and the cashier was not liable, for it was only the statement of honest opinion, and not a guaranty.13 11 Grant v. Cropsey, 8 Neb. 205 (1879). 12 U. S. v. City Bank, 21 How. 356. 18 Horrigan v. First National Bank, 10 Chic. Leg. News, 112 (Tenn.); Crawford v. Boston Store Mercantile Co., 67 Mo. App. 39; Hadden v. Dooley, 92 Fed. 274 (1899); First National Bank v. Marshall Bank, 82 Fed. 725 (1897). |