64

Merchants' National Bank v. State National Bank.

in blank as cashier to the bank; Salem Bank v. Gloucester Bank, nature 17 Mass. 29; nor by an agreement to printed form of transfer on the back. give notice to a surety in case of the de- Subsequently C. obtained a loan from fault of a maker to a note pledged as plaintiff, giving the said certificate as collateral; New Hampshire Savings collateral. The forgery having been Bank v. Downing, 16 N.H. 187; nor has discovered, plaintiff brought action he power to create any agency for the against defendant for the damages bank; United States v. City Bank, 21 sustained by him. Held, that the sigHow. 356; nor transfer a judgment of nature of the cashier bound the bank, the bank; Holt v. Bacon, 25 Miss. 567; and that the bank by that signature so nor assign the choses in action or cor- far warranted the genuineness of the porate property of the bank for the certificate as to be estopped from setpayment of its precedent debts; Hoyt ting up the forgery as a defense. SHEPLEY, J., said: "The real question v. Thompson, 5 N. Y. 320; although the contrary was held in Kimball v. Cleve- presented in the case is whether the land, 4 Mich. 606; Crockett v. Young, bank by signing the blank transfer has 9 Miss. 240; nor to sell or mortgage so far warranted the genuineness of property of the bank; United States v. the certificate, that it is estopped from City Bank. 21 How. 356; Holt v. Bacon, setting up the forgery as a defense to 25 Miss. 567; Leggett v. Banking Co., this action. Defendant denies that the 1 N. J. Eq. 541; but in Bank of Ver- cashier had authority or right to bind gennes v. Warren, Hill, 91, the cashier the bank by the contract declared on. was held to have authority to accept Cashiers of a bank are held out to the and receipt for money paid to redeem public as having authority to act acproperty sold under an execution in cording to the general usage, practice and course of business conducted by favor of the bank. From the cases last cited it appears the bank. Their acts, within the scope that the cashier cannot sell the prop- of such usage, practice and course of erty of the bank, other than its usual business, will in general bind the bank Morse v. Massanegotiable securities in the usual course in favor of third persons possessing no Bank, 1 Holmes, 209; of business; but after the directors other knowledge. have determined to sell such property, chusetts Nat. the cashier is the proper person to carry Minor v. The Mechanics' Bank, 1 Pet. 70; Merchants' Bank v. State Bank, 10 out that determination. In some of the States it is held that Wall. 604. One of the ordinary and a cashier may, in the ordinary course well-known duties of the cashier of a of business, transfer or assign the se- bank is the surrender of notes and curities of the bank for the purpose of securities upon payment, and his sigpaying its debts; Everett v. United nature to the necessary transfers of States, 6 Port.(Ala.) 166; Carey v. Giles, securities or collaterals when in the 10 Ga. 9; Lafayette Bank v. State Bank, 4 McLean, 208; Kimball v. Cleveland, 4 Mich. 606; Crockett v Young, 9 Miss. 241; Cooper v. Curtis, 30 Me. 488.

form of bills of exchange, choses in action, stock certificates, or similar securities for loans, which are personal property, is an act within the scope of It is within the general authority of the general usage, practice and course the cashier of a bank to sign in its be- of business in which cashiers of a bank half, a blank transfer upon a certificate are held out to the public as having auUndoubtedly the ordiof stock in the name of the bank held thority to act. by it as collateral security for a loan, nary duties of a cashier do not compreand to deliver the certificate to the hend the making of a contract which pledgor on payment of the loan. This involves the payment of money, withwas expressly held in Matthews v. out an express authority from the diMassachusetts National Bank, 1 Holmes, rectors, unless it be such as relates to 396; S. C., 10 Albany Law Journal, the usual and customary transactions 199, which was a decision by SHEPLEY, of the bank. But the transfer of cerJ., in the Circuit Court of the United tificates of stock held as collateral is States for the district of Massachusetts. certainly one of the usual and customIn that case the defendant, a National ary transactions of banks, and the pubbank, loaned money to C., taking in lic would be no more likely to require good faith, as security therefor, what evidence of a special authority to the purported to be a certificate of two cashier to make such transfer than of a hundred shares of the stock of a rail- special authority to draw checks on road company issued by the company to other banks, or to perform any other of the bank, but which was a forgery by the daily duties of his office. The sigC. C. paying the loan, the cashier of nature of the cashier must therefore be the signature of the defendant, for the purpose and with considered as the intent of restoring the certificate bank, and the question returns whether to C., returned it to him with his sig- such blank assignment on the back of

Merchants' National Bank v. State National Bank.

checks, and the decision was put upon
grounds so general as to include cash-
iers. But such is no longer the law, at
least as to cashiers.

the certificate by the bank be so far
a warranty of the genuineness of the
certificate that the bank is estopped
from setting up the forgery as a de-
fense."
In Farmers', etc., Bank v. Butchers'
The cashier may take such measures etc., Bank, 16 N. Y. 125, it was decided
for the security or collection of debts that tellers could bind the bank by
due the bank as he deems proper, and certifying checks where such was their
he may act in reference to the collec- practice. But in the more recent case of
tion or compromise thereof, according Pope v. Bank of Albion, 57 N. Y. 126, it
to the general usage, practice and was held that a certificate by any one
course of business; Bridenbecker v. of less authority than a cashier, as an
Lowell, 32 Barb. 9; Hartford Bank v. assistant cashier or teller, was not good
Barry, 17 Mass. 94; Bank of Pennsyl- where there were no funds, in the
vania v. Reed, 1 Watts. & S. (Penn.) 101; absence of express authority, or of a
Payne v. Commercial Bank, 14 Miss. custom or usage, for assistant cashiers
24; Potter v. Merchants' Bank, 28 N. or tellers to certify. But as that case
Y. 641.
was properly decided on the point that
Where it was provided in a bank the check was postdated it is doubtful
charter, that the funds of the bank if it will be followed on the point of
should in no case be liable for any con- the power of an assistant cashier or
tract or engagement, unless the same teller. Certainly prior to that case it
should be signed by the president, and was considered settled in this State
countersigned by the cashier, it was that the certificate of a teller bound the
held that this did not apply to the ordi- bank. See opinion of FOLGER, J., Con-
nary business and duties of a cashier, tinental Nat. Bank v. Nat. Bank of Com-
such as indorsing bills, etc. Merchants monwealth, 50 N. Y. 581. However
Bank v. Central Bank, 1 Ga. 418; Cary there can be no doubt of the power of
v. McDougall, 7 Ga. 84; Northern Bank any officer or agent of the bank to bind
of Kentucky v. Johnson, 5 Cold. (Tenn.) the bank by a certificate without funds
88.
where a usage or practice of the bank
If the cashier of a bank enters into a is proved for such officer or agent to
contract in behalf of the corporation, certify checks where a drawer has
without authority for the purpose, and funds.

the bank claims the benefit of the con- A cashier has, however, implied pow-
tract, it is thereby ratified by the cor- er to certify checks only in the regular
poration. Medomnak Bank v. Curtis, course of business, so that he cannot
24 Me. 36; Farmers and Mechanics' Bank bind the bank by a certificate to a
v. Troy City bank, 1 Dougl. (Mich.) 457. check given as collateral security and
If the cashier of a bank should pay to reciting its purpose upon its face. Dor-
a bona fide holder the amount of a sey v. Abrahams (Sup. Ct. Penn.), 5
forged check drawn on the bank, or of Rep. 53.
forged notes of the bank, the payment It is to be observed that the bank is
cannot be recalled; because he is in- only bound by the wrongful act of its
trusted by the bank with an implied cashier or other officer in favor of an
authority to decide on the genuineness innocent person, that is, one who has
of the handwriting of the drawer of no knowledge of the wrong. So that
the check, and of the paper of the bank, if a cashier or teller certify a check to
The act of payment is to be distin- be good when there are no funds, the
guished in this respect, from a mere ad- bank is not liable thereon to one who
mission. Bank of United States v. Bank knew that there were no funds. Farm-
of Georgia, 10 Wheat. 333, S. P., Salem ers' Bank v. Butchers', etc., Bank, 16 N.
Bank v. Gloucester Bank, 17 Mass. 1; Y. 125; Saelm Bank v. Gloucester Bank,
Merchants' Bank v. Marin Bank, 3 Gill. 17 Mass.1.
(4.) 96.

Among the inherent powers of a cashier is that of certifying checks, and while as between himself and the bank he has no right to certify a check to be good unless there are funds in the bank at the time to meet it, yet if he does give such a certificate, the bank will be liable thereon to a holder in good faith. Cook v. State Nat. Bank, 52 N. Y. 96, reported hereafter in this volume.

It was long ago decided in Massachusetts (Mussey v. Eagle Bank) that a bank teller had no authority to certify

In the case last cited a forged certification of a check was presented at the bank upon which the check was drawn to the teller whose certificate it purported to be, and he pronounced it genuine. Held, that he thereby adopted the certification, and that the bank was bound by it the same as if it was genuine.

So a cashier may bind his bank, to an innocent party, by a certificate of deposit when there is no deposit. Barnes v. Ontario Bank. 19 N. Y. 152; State Bank v. Kuin, 1 Ill. 75.

But in the absence of express au

H

Merchants' National Bank v. State National Bank.

the "cashier" of a bank is payable to the bank, and no indorsement is necessary to give title to the bank. First National Bank v. Hall, 44 N. Y. 395; S. C., 4 Am. Rep. 698; Bank of New York v. Bank, 29 N. Y. 619; Wright v. Boyd, 3 Barb. 523; Lacey v. Central Nat'l Bank, 4 Neb. 179; Pratt v. Topeka Bank, 12 Kan. 570.

thority from the directors or of knowl- A bill drawn payable to the order of edge and assent or implied assent on their part, a cashier cannot, by gratuitously receiving securities for safekeeping, render the bank liable for them in case of loss. First National Bank v. Graham, 79 Penn. St. 106; S. C., 21 Am. Rep. 49; First National Bank v. Ocean National Bank, 60 N. Y. 278; S. C., 19 Am. Rep. 181; Wiley v. First National Bank, 47 Vt. 546; S.C., 19 Am. Rep. 122; all of which cases are reported in this volume. And in the case last cited it was held that national banks were not authorized to take special deposits for safe-keeping, and that a cashier could not render the bank liable thereon by an express agreement. And this view was approved by the Court of Appeals of New York in First National Bank v. Ocean National consequence thereof the bank suffers, Bank, supra.

The indorsement of negotiable paper by the cashier of a bank, by writing his name on the back of it with the addition of the name or designation of his office merely, is a sufficient indorsement to bind the bank. Robb v. Ross County Bank, 41 Barb. 586; Bank of Genesee v. Patchin, 13 N. Y. 309.

Thus where the cashier, for the accommodation of the payce or prior indorser, indorsed his name upon a note, not belonging to the bank, thus A. B. Cas., held, that the indorsement was official and binding on the bank. Houghton v. The First National Bank, 23 Wis 663; S. C., 7 Am. Rep. 107.

Notice to a cashier in the course of the duties of his office is notice to the bank. Trenton Banking Co. v. Woodruff, 2 N. J. Eq. 117; Eranch Bank v. Steele, 10 Ala. 915; New Hope Bridge Co. v. Phoenix Bank, 3 N. Y. 156.

A cashier is bound to exercise reasonable skill and ordinary care and diligence in the discharge of his duties, and if he fails in either regard and in

he is liable to make good the injury. And much more is he liable to respond if he cause any damage to the bank by any illegal, fraudulent or tortious act. Commercial Bank v. Ten Eyck, 48 N. Y. 305; Minor v. Bank of Alexandria, Peters, 70; Austin v. Daniels, 4 Denio, 299.

It is a violation of duty for a cashier to allow an overdraft. Bank of St. Mary v. Calder, 3 Strobh. (S. C.) 403; or to certify a check without funds; or that a deposit has been made when in fact none has been made, or to change without authority the securities of the bank. Barrington v. Bank of Washington, 14 Serg. & R. (Penn.) 405; to omit some duty A cashier cannot bind the bank by required of him by law, as to make a an accommodation indorsement ex- report to the Comptroller of the Curcept in favor of an innocent person rency, whereby the bank has been subwho has been prejudiced by the in- jected to a fine or otherwise injured. dorsement. Bank v. Patchin, supra; Bank of Washington v. Barrington, 2 Farmers, etc., Bank v. Troy City Bank, Penn. 27 And in each case the sureties 1 Dougl. (Mich.) 457. Nor can he bind to the cashier's bond are liable. the bank as an accommodation in cashier's bond conditioned "well and dorser of his own promissory note. truly to execute the duties of cashier," Such a note so indorsed would carry includes not only honesty but reason notice to a purchaser of its character able skill and diligence. Minor v. and in an action to charge the bank Mechanics' the holder would be required to show Peters, 46. actual authority in the cashier before he could recover. West St. Louis Savings Bank v. Parmalee, etc., Bank (U. S. Supreme Ct., 1878), 16 Alb. Law Jour. 473.

Bank of Alexandria,

A

1

As to the liability of the sureties on a cashier's bond, see Tapley v. Martin, post, and note; Graves v. Lebanon National Bank, post. -REPORTER.

Case v. Terrell.

CASE V. TERRELL.

(11 Wallace, 199.)

Receiver - whom he represents.

The receiver of a National bank represents the bank, its stockholders and its creditors, but not in any sense the National government; nor can the government be subjected to litigation, growing out of its relations to these banks, in all the various courts in which their affairs may be the subject of judicial controversy.

A

PPEAL from the Circuit Court for the District of Louisiana. Terrell and others, creditors of the First National Bank of New Orleans, which had failed and been put into liquidation, brought this bill in chancery in the court below against one Case, who on the failure of the bank had been appointed receiver of it, Hurlburd, Comptroller of the Currency of the United States, and one May and Beaureguard, citizens of Louisiana.

The prayer for relief was that a certain admitted debt due to the United States from the bank be ascertained; that they (the United States) be charged with certain sums, and required to account for them, and that a writ of injunction issue restraining the Comptroller from making a dividend of the funds of the bank until the account be adjusted. Case and Hurlburd, the receiver and Comptroller as aforesaid, appeared and answered; the answer of the latter being put in for him by the district attorney, and neither signed by Hurlburd nor sworn to by him. In it, "he submits, on behalf of the United States, to the decisions of the court the claims of the United States to priority of payment over the allowed claims of the creditors of said bank that are not disputed."

The final decree, besides making a general order on the Comptroller to distribute the funds of the bank in his hands ratably among its creditors as the law directs, decreed against the United States in favor of the creditors of the bank for the sum of $206,039.91, and that no claim of the United States shall have any priority in the distribution of the funds of the bank except as to the bonds pledged to secure its circulation. From this decree Case, the receiver, and Hurlburd, the Comptroller, appealed.

Case v. Terrell.

B. H. Bristow, Solicitor-General, and C. H. Hill, Assistant Attorney-General, for Hurlburd, Comptroller; Mr. Case, for himself.

J. A. Campbell and H. B. Kelly, contra.

Mr. Justice MILLER delivered the opinion of the court.

It is seen, from the bill and decree, that while the United States was not made a defendant, and while it is well settled that it could not be sued in the court below, the only relief prayed by the bill was relief against the United States, and the only decree rendered which was not merely formal was a decree against the United States for $200,000, and a further decree barring the right to assert her priority as a creditor of the bank in the distribution of its funds. It is strange that in any court professing to administer the English system of equitable jurisprudence such a decree could be rendered against any one not made a party to the suit, and who had in no manner appeared in the case; and it is almost incredible that in any Federal court of this Union, except the Court of Claims, a moneyed judgment could be rendered against the United States.

The contrary has been so repeatedly decided that it is a waste of time to re-argue the proposition, which will be found fully asserted. in the recent cases of DeGroot v. United States, 5 Wallace, 419; United States v. Eckford, 6 id. 484; The Siren, 7 id. 152; and The Davis, 10 id. 15. In the case of the United States v. Eckford it was held that, although in a suit in which the United States was plaintiff, a set-off could be pleaded and allowed, yet no judgment could be rendered for a balance found to be due to the defendant by the verdict of the jury, either in the Circuit Court, where the case was tried, or in the Court of Claims, where suit had been brought on the verdict. It is true, that in the two last cases cited above it was held that in a case of admiralty, where the res was rightfully before the court, and was taken into possession by its officer without the necessity of suit or process against the United States, it could be subjected to certain maritime liens, though the ownership was in government. But in these cases the government came into court of its own volition to assert its claim to the property, and could only do so on condition of recognizing the superior rights of others.

We are quite at a loss to know on what principle the jurisdiction in the present case is asserted, for the briefs for the appellees are devoted wholly to the merits of the controversy. But we must