WEEKLY NOTES OF CASES. VOL. IX.] THURSDAY, SEPT. 2, 1880. Supreme Court. and made my ordinary deposit in the bank, and after we were through I said to the teller that I would take the First National Bank certificates for $700. I filled out a check, and he handed [No. 2. me a certificate; I looked at the certificate for $700; it was to be made on demand, and asked him, is this the First National Bank certificate? the answer was, yes, sir, it is; I then said, this reads Blumer & Co; I want this distinctly understood, I want nothing but the First National Bank certificates; he answered me that this was one and the same thing; that it should pass to the credit of the company, the same as it was before. With this assurance I took that certificate. This was in the presence of the cashier of Banks-Responsibility of to depositors--Fraudu- the bank, Jacob A. Blumer.' Two other certifilent representations-Agency of bank officers-cates, aggregating, with the one above menUltra vires, when no defense in suit against tioned, the sum of $3000, were obtained under corporation. March 3, 1880. Steckel et al. v. The First National Bank of Allentown. A bank is responsible for the safekeeping of the money of a depositor, and it cannot set up the fraud of its own officers as an answer to a demand for repayment. Under what circumstances lack of ordinary care against deception is no answer to fraud, commented upon. Error to the Common Pleas of Bucks County. Assumpsit, by Alfred P. Steckel et al., partners, trading as the Columbia Slate Company, against the First National Bank of Allentown, to recover $3251.63, a balance of money deposited with said bank. The material facts, as they appeared upon the trial, before WATSON, P. J., were stated in the opinion of the Supreme Court, as follows: "The plaintiffs kept an account with the corporation defendant, and were in the habit of making deposits and drawing checks in the usual manner. William H. Blumer was the president of the bank; his son, Jacob Blumer, was the cashier. Three of the directors, including the said William H. Blumer, composed the banking house of Wm. H. Blumer & Co., which carried on business but a few hundred feet distant from the First National Bank of Allentown. The plaintiffs having money on deposit with the bank, and being desirous of obtaining interestbearing certificates therefor, called at the bank for that purpose. Dr. A. P. Steckel, one of the plaintiffs, testifies as to what occurred, substantially as follows: 'I went to the bank every week or two to make my deposits; some time in August, when I made deposit, I asked the teller, George Straub, does the First National Bank take any money on certificates? He said, yes, sir; do you want to leave us some? I said, no, not to-day. I asked him whether the First National Bank issues certificates of deposit, and as a matter of course pay interest, and he said yes; then I came there again in September, 1876, VOL. IX.-2 circumstances not essentially different. There was evidence that the president of the bank recognized them as binding upon the bank, and offered to reinstate the plaintiffs as they were before, when the bank examiner was through his examination. That examination, however, resulted in the closing of the bank.” The plaintiffs presented the following points: (2) That if the jury believe that the certificates of Wm. H. Blumer & Co. were not accepted by the plaintiffs from the defendant as a payment and satisfaction pro tanto of the indebtedness of the bank, the plaintiffs are entitled to recover upon the original indebtedness. Answer. I can not so instruct you. (3) That whether the certificates of deposit were received by the plaintiffs in payment of the bank's indebtedness to them, is a question of fact for the jury. Answer. I can not so instruct you. (4) That the burden of proving that the certificates of deposit were accepted by the plaintiffs in payment of the bank's indebtedness to them, is upon the defendants. Answer. I can not so instruct you. (5) That if the jury believe that the plaintiffs were deceived by the fraudulent representations of the officers of the bank, and led to believe that the certificates of Wm. H. Blumer & Co. were certificates of deposit in the First National Bank of Allentown, the reception of them by the plaintiffs was not a payment, and the plaintiffs would be entitled to recover. Answer. There is no evidence of fraud in the giving of the certificates by any officer or servant of the bank, except such as relates to the false representations made by the teller. These false representations must not affect the bank with the consequence of fraud, if the money for which the plaintiffs' checks were drawn was appropriated according to their directions. The Court charged the jury, inter alia, as fol lows: "This case has been tried and regarded | tion of fraud to the jury, as appears by the anvery much as involving the ordinary relation of swers to the points and the charge ut supra. debtor and creditor. I have been so disposed to look upon it myself, and it is only upon reflection during the argument of the case that I have seen cause to change my opinion in this respect. I do not think the relation existing between the bank and its depositors is the same as that obtaining between a debtor and creditor in ordinary cases. . . The bank is liable for its E. I. Fox (with whom were Evan Holben and D. D. Roper), for the plaintiffs in error. The question of fraud was for the jury, however slight the evidence. Frazer v. Hill, 2 Phila. Hill v. Gray, I Starkie, 352. Pilmore v. Hood, 5 Bingham, N. C. 97. The bank received the benefit of the money sentations. safe keeping and for its return upon demand, by assuming by $3000 the overdrafts of Blumer and it is not until demand is made upon it for the officers had no authority to make false repre& Co., and is therefore responsible, even though payment, and a refusal to pay, that any suit can be maintained against it for the deposit in this case. It is not until that time I think that the usual relations between debtor and creditor arises between them, and any disposition which the bank may make of the deposit by the direction of the depositor, is just as efficient a discharge to the bank as an actual payment to him in cash. It makes no difference to the bank to whom that deposit is paid, so that the deposit is paid according to the direction of a depositor, and when he gives to the bank a direction to pay to somebody else or pays to the credit of somebody else, and the bank thus pays the credits according to the direction, it is no longer liable to the original depositor.. . . It appears also by the testimony that three other checks were drawn by the plaintiffs against their account, for the sums of $700, $300, and $2000, respectively, and that they received from the teller in exchange for these checks three certificates of deposit, signed by Wm. H. Blumer & Co., and acknowledging that the plaintiffs had deposited with them these respective sums, payable with interest, upon the return of these certificates. These are dated Sept. 23, 1876; Dec. 1, 1876; and Feb. 2, 1877. You have heard the circumstances under which these checks were drawn, and these certificates of deposit received. Prima facie, this would be a payment by the bank to the plaintiffs or their order of the amounts represented by the several checks and certificates." Morse on Banks and Banking, pp. 12, 13, 91-93, 105. Edward Harvey (with whom were R. E. Wright, Jr., and G. & H. Lear), for the defendant in error. As the bank held the plaintiff's money on deposit, it held it subject to the order of the depositor; when that order was drawn, presented, and passed into the account, it was prima facie an appropriation of the fund, and an extinguishment of the depositary's liability. Before one who alleges the commission of fraud can disaffirm the contract he must return or offer to return whatever he has received under the contract. He must place the other party as nearly as possible in statu quo; to do this it is incumbent on him to restore money, property, or securities, unless they are absolutely worthless; and the burden to show this is on the party who failed to restore them. Cooley on Torts, 504, 5. Rowley v. Bigelow, 12 Pick. 307. Pearsoll v. Chapin, 8 Wr. 9. Bell v. Hartman, 9 Phila. 1. The plaintiffs knew that the teller in giving the certificates was acting ultra vires, and could not bind the bank. Bigelow on Fraud, 73. Grace v. Adams, 100 Mass. 507. Rice v. Dwight Manufacturing Co., 2 Cush. 80. Lloyd v. West Branch Bank, 3 H. 174. The Court further instructed the jury that the The plaintiffs could and did read the certifibank was not liable for the fraudulent represen-cates, and should not have been misled. tations of Straub; and in answer to the remark of counsel that there was evidence of fraud which should be submitted to the jury, replied: "I hardly think so. If there was evidence sufficient to justify the jury in finding fraud, then it should be submitted; but if there is not enough to justify the jury in finding that way, I would be bound to set aside the verdict, and grant a new trial. If I find there was no fraud, then it is not proper to submit it to the jury." Under instructions, the jury found a verdict in favor of plaintiffs for $251. Judgment thereThe plaintiffs thereupon took this writ, assigning for error the refusal to submit the ques May 3, 1880. THE COURT. The principal cause of complaint in this case is that the learned Judge of the Court below withdrew from the jury the consideration of the question of fraud, upon the ground that there was not sufficient evidence to submit it. [The Court here recited the facts ut supra.] We must assume the jury would have found the facts as testified to by the plaintiff, Steckel. The facts established, we have a case of palpable fraud. It is not an answer to Assumpsit, by Philip Zeigler against the First National Bank of Allentown, to recover $2980.80 deposited with said bank. say the plaintiffs ought not to have been deceived, and with ordinary care would not have been. The fact that the Blumers were respectively president and cashier of the National Bank, as well The defendant was a national bank, organized as leading members of the banking-house of and incorporated under the National Banking Blumer & Co., was calculated to mislead and Laws, and was located and doing business in the deceive, and when told in positive terms that city of Allentown. It suspended sometime in the certificates, although signed by Blumer & March or April, 1877. At the time of its susCo., were the certificates of the bank, the plain-pension, and for a number of years prior thereto, tiffs may readily have believed it was all right. It was urged, however, that, even if there was a fraud, it does not affect the bank; that an agent can only act within the scope of his authority; and that a bank is not bound by the fraudulent representations of one or more of its officers. There is no doubt as to the general rule that an agent can only bind his principal so long as he acts within the scope of his authority; but we do not think the principle applies in this case. A bank is responsible for the safe keeping of the money of a depositor, and it cannot set up fraud of its own officers as an answer to a demand for repayment. Public policy forbids it. The plaintiffs, after ascertaining the fraudulent character of the transaction, tendered the certificates to the bank and demanded the payment of their original deposit. In other words, they rescinded the contract on the ground of fraud. If their allegations are true, they had a right to do so, and proceed upon the original cause of action. The question of fraud should have been submitted to the jury. What has been said sufficiently covers the points involved. Judgment reversed and a venire facias de novo awarded. Wm. H. Blumer was the president of the bank, Jacob A. Blumer, a son of Wm. H. Blumer, cashier, George E. Straub, teller, and Wm. H. Blumer, Jesse M. Line, and Wm. Kern were among the board of directors. There was also at the same time a private banking house in the city of Allentown, composed of Wm. H. Blumer, Jesse M. Line, and Wm. Kern, trading under the firm name of Wm. H. Blumer & Co. In March, 1877, Blumer & Co. failed. On Oct. 11, 1876, and for a long time prior thereto, the firm of Wm. H. Blumer & Co. was largely insolvent, and this insolvency was known to the officers of the First National Bank of Allentown. Upon the trial, before MEYERS, P. J., the plaintiff "proposed to prove by Philip Ziegler, the witness on the stand, that, prior to 1874, the plaintiff kept his accounts with and did his banking business at the Union National Bank of Reading, Pa.; that some time in the year 1874 the plaintiff went to the First National Bank of Allentown, Pa., and in the bank he met Jacob A. Blumer, the cashier of the First National Bank of Allentown, Pa., and told him that he wanted to deposit some money in the First National Bank; that he wanted to deposit it in the bank so that he could draw his checks against it whenever he wanted to; that Jacob A. Blumer, the cashier, then said that that was all right; that he then gave the money to Jacob A. Blumer, who took it, and proposed to give the plaintiff a certificate of deposit; that plaintiff then said he wanted no certificate of deposit, that at the Union National Bank of Reading he had a deposit book and checks to draw against his accounts, and that was the way he wanted his accounts in the First National Bank; that the said Jacob A. Blumer then said that that was not Banks-Authority of bank officers-Depositors the way they did business, that they gave no Opinion by PAXSON, J. MERCUR, J., absent. [See next case; also Resh v. Bank, post, p. 21. Cf."ULTRA VIRES.-Certain cases where the defence of ultra vires is inadmissible in actions against corporations," 11 Central Law Jour. 81, 101.] March 4, 1880. Ziegler v. The First National Bank of Allentown. -Fraud. books, but gave certificates of deposit, that that was the way they did business, that it was all the same, that he could draw his checks on the bank and the bank would pay them; and that the said Jacob A. Blumer then told and assured plaintiff that it was all right; that his money was deposited in the First National Bank of Alientown; in consequence of which plaintiff took said certificate of deposit, not being able to read the same, and believing and being assured by the said Jacob A. Blumer that it was the certifiError to the Common Pleas of Lehigh County. cate of the First National Bank of Allentown; The cashier is the executive officer of a bank, and authorized by the nature of his office to receive money on deposit; after receiving it, no trick or fraud on his part, by means of which the money passes to a firm in which the bank officers are largely interested, can absolve the bank from its liability. Relations of bank officers to the public, commented apon, per PAXSON, J. Steckel v. Bank, ante, p. 17, followed. that at the same time the said Jacob A. Blumer | of plaintiff, entered said balance of $2980.80, then due plaintiff, to the credit of Wm. H. Blumer & Co. on the books of the bank, for the purpose of making good in part said overdraft of Wm. H. Blumer & Co." gave plaintiff a number of blank checks on the First National Bank of Allentown; that after that the plaintiff deposited money from time to time, and drew checks on the First National Bank of Allentown from time to time up to October 11, 1876, which checks were all duly paid by said bank; that from time to time he made settlement of his accounts, when the checks paid by the bank were surrendered to him and new certificates given to plaintiff; that on October 11, 1876, he made a settlement with the officers of the bank and deposited some more money, and that the balance then due him was $2980.80, for which he received a certificate from the officers of the bank, which in fact was the certificate of the banking house of Wm. H. Blumer & Co., which certificate is marked 'A;' that up to this time all certificates plaintiff had received were surrendered up to the First National Bank, and plaintiff does not know, and never did know, whether they were the certificates of Wm. H. Blumer & Co. or of the First National Bank; that when plaintiff received the certificate of October 11, 1876, he did not know that it was the certificate of Wm. H. Blumer & Co., but, relying upon the representations and assurances of the said Jacob A. Blumer, that he had his money deposited in the First National Bank of Allentown, he believed said certificate to be a certificate of the First National Bank, and that he never discovered that said certificate was the certificate of Wm. H. Blumer & Co., and not of the First National Bank of Allentown, until some time in the spring of the year 1877, after the failure of the First National Bank of Allentown, and of Wm. H. Blumer & Co.; that, after October 11, 1876, plaintiff drew a number of checks on said First National Bank, aggregating $480.35, which were paid by said bank; that the plaintiff never knew of the existence of the firm of Wm. H. Blumer & Co. until after their failure in 1877, never dealt with said firm, and that all his dealings in the premises were with the officers of the First National Bank of Allentown. This to be followed by proof that, on October 11, 1876, and for a long time prior thereto, the firm of Wm. H. Blumer & Co. was largely insolvent, which insolvency was known to the officers of the First National Bank of Allentown; and that on that day the account of said Wm. H. Blumer & Co. in the First National Bank of Allentown was overdrawn to a large amount, and that said account remained overdrawn down to the time of the failure of Wm. H. Blumer & Co. and the suspension of the said First National Bank; and that at the time of said failure said overdraft exceeded $100,000; and that, on October 11, 1876, the officers of said First National Bank of Allentown, without the knowledge and consent Objected to; objection sustained, and offer overruled; exception. In the absence of evidence, a verdict was rendered for the defendant, and judgment entered thereon; whereupon the plaintiff took this writ, assigning for error the rejection of his offer. John Rupp (with whom was John D. Stiles), for the plaintiff in error. The cashier of a bank is the general executive officer of the bank, and can bind it. Bissell v. First National Bank of Franklin, 19 Sm. 415. Harrisburg Bank v. Tyler, 3 W. & S. 376. Bank of Penna. v. Reed, 1 Id. 101. Story on Agency, ?? 114 and 115. Bank of Kentucky v. Schuylkill Bank, 1 Parsons's Lloyd v. The West Branch Bank, 3 H. 172. Angell & Ames on Corporations, 311. from denying its liability. By payment of interest the bank is estopped 2 Parsons on Contracts, 793. Crowell v. Meconkey, 5 Barr, 168, see p. 176. Woods v. Wilson, 1 Wright, 379. Hill et al v. Epley et al., 7 Casey, 331. Merchant's National Bank v. State National Bank, Where one dealing with another volunteers an explanation as to the contents of a written paper, the party dealing with him may rely upon such voluntary explanation, and need not ask to have the paper read. Edward Harvey (with whom was R. E. Wright, Jr.), for the defendant in error. The money was accepted by the cashier, not as agent of the bank, but as agent of Blumer & Co. The principal is only liable where the act done is in the exercise and within the limits of the powers delegated. Mechanics' Bank v. Bank of Columbia, 5 Wheat. 326. Little Miami R. R. Co. v. Wetmore, 19 Ohio, N. S., 110. Smith's Master and Servant, 150. Lloyd v. West Branch Bank, 3 H. 174. Ellis v. McCormick, I Hilton, 313. Rice v. Dwight Manufacturing Co., 2 Cush. 80. The party electing to rescind must place the | other party as nearly as possible in statu quo. Babcock v. Case, 11 Sm. 427. Beetem v. Burkholder, 19 Sm. 249. Moore v. Shenk, 3 Barr, 12. Pearsoll v. Chapin, 8 Wr. 9. Turnpike Co. v. Com., 2 Watts, 433. Bell v. Hartman, 9 Phila. I. Estoppel cannot be invoked if the cashier was acting without the scope of his authority. May 3, 1880. THE COURT. When the plaintiff took his money to the First National Bank of Allentown, and handed it to the cashier for deposit, the bank became responsible therefor. The cashier was the executive officer of the bank, and authorized by the very nature of his office to receive money on deposit. After receiving it, no trick or fraud on his part by means of which the money was passed over to Blumer & Co., a firm in which the bank officers were largely interested and appeared to have had the control, could absolve the bank from its liability. No class of men have the confidence of the people to a greater extent than bank officers. Depositors do not deal with them at arms' length, and can be imposed on with the greatest ease by such officials. It would be monstrous to allow them to take advantage of the ignorant and unwary by reason of their position and the confidence which it inspires. It was doubtless a misfortune to this bank to have unworthy officials, if such should prove to be the case. It certainly was unwise to permit its chief officers to occupy a dual position with divided interests, but the consequences resulting therefrom cannot be visited upon those who dealt in good faith with the bank. This case is ruled in a great measure by Steckel 7. The Bank, just decided [ante, p. 17], It was error to reject the evidence contained in plaintiff's offer. The facts offered to be proved amounted to a fraud upon the plaintiff, and he was entitled to have the question passed upon by a jury. Judgment reversed and a venire de novo awarded. Opinion by PAXSON, J. GREEN and MERCUR, JJ., absent. [See next case. ] March 4, 1880. Resh v. The First National Bank of Allentown. Banks-Authority of officers of-Principal and agent-Fraud-Promissory note. In an action by a bank upon a promissory note, the defendant offered to prove: that the note was procured from the defendant by fraud on the part of the bank officers; that he went to the bank to receive payment of a certifi cate of deposit; that when the money was paid, he signed a paper represented by the bank officer to be a receipt for the money, but which afterwards turned out to be the note upon which suit was brought: Held (reversing the judgment of the Court below), that such facts constituted a defence to the action, and that the offer should have been received. P. Ziegler v. Bank, ante, p. 19, and Steckel v. Bank, ante, 17, followed. Error to the Common Pleas of Lehigh County. Assumpsit by the First National Bank of Allentown against William Resh. plaintiff put in evidence a promissory note for Upon the trial, before ALBRIGHT, P. J., the indorsed by him in blank. $500, made by defendant, to his own order, and The defendant offered to prove: (1) That at various times he Allentown, Pa., receiving certificates of deposit, deposited moneys at the First National Bank of which he supposed to be certificates of deposit of the First National Bank of Allentown, and that on the 7th day of March, 1877, he, the defendant, presented one of these certificates at the First National Bank of Allentown, and demanded payment therefor, and was requested by an officer of the Bank to sign a paper, which defendant supposed at the time to be a receipt for the sum of $500, that being the amount of the certificate of deposit which defendant presented for payment. tent and irrelevant, because the offer proposes Objected to as incompeto prove the supposition of the defendant, and because there is no offer to show that there was any fraud or imposition practised upon the detion sustained; exception. fendant at the time the note was signed. Objec deposit for $500, to the plaintiff, which he had (2) That when he presented the certificate of received from the First National Bank of Allen town, Pa., he was requested to sign a paper as a receipt for the sum of $500; that the defendant signed said paper under the representations by the officers of the bank that it was a receipt, and that deceit and fraud was practised by the officers of the bank when they procured his signature to the note in suit, and that the signature thus obtained was the signature to the note in suit and not a receipt. Objected to as incompetent and irrelevant, because the offer discloses |