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stairs at either end of the station leading from the limited to offenses arising out of the internal workplatform to the street. The stairs at the north ending of such banks — to offenses arising out of the of the station were open at the top, as if they might relation between the officers, clerks and agents of be used. These stairs and a platform at the bottom of the bank, and the bank itself; but that as to the them about four feet from the ground were construc-offenses arising out of the business relations between ted by an express company for its sole use, but they the bank or its officers and agents and its customers, were on defendant's premises. Plaintiff in attempt- the State court had jurisdiction. Thus the court ing to pass down these stairs in the dark from the said: “It is theft by our law to steal from a Naupper platform to the street, without fault on her tional bank; it is burglary to break into one for the part, fell from the lower platform to the ground, purpose of stealing; and it is cheating to obtain striking beyond the limit of defendant's premises money from one by false pretenses.
As a corporand was injured. The court held defendant liable ate being, located in the State, its property and infor damages from such injury. The decision is an terests and business are protected by State laws and application of the general rule that railway companies subject to State legislation, and so it is competent are bound to keep in a safe condition, all portions of for the legislature to protect its customers, the cititheir platforms and approaches thereto, to which zens of the State, in their business dealings with it, the public do, or would naturally resort, and all por whatever they may be, whether constituting the tions of their station grounds reasonably near to relation of borrower and lender or special or general the platforms where passengers or those who have depositor and bailee ; and they may be controlled and purchased tickets with a view to take passage in protected by penal enactments, without interferthe cars would naturally or ordinarily be likely to ence with the laws of Congress.” In Commongo. See McDonald v. Chi. & N. W. Ry. Co., 26 Iowa, wealth v. Tenney, 97 Mass. 50, the Supreme Ju124; Shepperd v. Midland Ry. Co., 20 W. R. 705; dicial Court of Massachusetts held that a State Barnes v. Ware, 2 Car. & K. 661; Mersey Docks & H. court had jurisdiction of an indictment against Board v. Penhalloro, L. R., 1 H. L. 93; Metcalfe v. an officer of a National bank for fraudulently Hetherington, 5 H. & N. 719. Also Tobin v. Portland converting to his own use the property of an S. & P. R. R. Co., 59 Me. 183; 8 Am. Rep. 415, where individual deposited in the bank, under a State a railroad company was held liable for injury to a statute making such fraudulent conversion “larhackman who was carrying a passenger to its depot. ceny.” This was on the ground that the offense caused by a cavity in its platform into which the charged had not been made punishable by act of hackman without fault on his part stepped. See Congress, as the 55th section of the National Bankfurther, a note to last-named case, 8 Am. Rep. 417; ing Act only applied to embezzlement of the propCaswell v. Bost. & Worcester R. R. Co., 98 Mass. 99. erty of National banks. Again, in Commonwealth v.
Felton, 101 Mass. 204, the same court held that a
bezzlement by an officer of a National bank of the The question as to the jurisdiction of State courts funds of the bank, since such offense is exactly over offenses by officers of National banks, is covered by the act of Congress, and also that as an important one, and one also on which the text Congress had made such offense a misdemeanor, writers — notably Bishop are unusually obscure. only, an accessory could not be punished under a See 2 Bishop's Crim. L. (6th ed.) 382; 1 Whart. Crim. State statute making the offense a felony. In ComL. 182. Mr. Bishop, after citing one case from Con- monwealth v. Barry, 116 Mass. 1, it was held in accordnecticut and two from Massachusetts, says: “It is ance with these decisions, that while a State court not proposed to inquire here how far the doctrines has not jurisdiction of the offense of embezzlement of this section are sound," and then after his man- of the property of the bank by an officer thereof, it ner- he refers to some other parts of his work where has jurisdiction of the offense of larceny of the there is nothing or next to nothing on the subject. property of the bank by such officer. The case The first case in which the question was considered turned on the distinction between “embezzlement” was State v. Tuller, 34 Conn. 280, wherein it was and “larceny.” Had the teller appropriated to his held that while a State court had no jurisdiction of own use the property of the bank while it was inthe offense of embezzlement by an officer of a Na- trusted to him during the day, the offense would tional bank of the property of a bank, it has juris- have been embezzlement, and not punishable in the diction of the larceny or purloining by such officer State courts; but having purloined such property of the property of others left with the bank for safe after it had been withdrawn from his possession keeping. This conclusion was based upon the argu- and custody, and placed beyond his lawful reach, ment that the exclusive Federal jurisdiction was his offense was larceny.
had lost money by gambling; that the directors BONDS OF BANK OFFICERS.
knew it and in consequence concluded to increase THERE is no especial difference between the bonds the bond; that thereafter the defendants became
of bank officers and the bonds of other officers so surety on the bond, and that the directors did not far as relates to the general rules of law, but by communicate to the defendants the fact of the reason of the fact that bank officers come more gambling. The court held that the evidence was nearly home to the business and bosoms of the com- properly excluded on the ground that the informamunity, these rules have usually been more rigidly tion withheld related, not to the business which was applied to them than to others. We propose briefly the subject of the suretyship, and not to the conto state some of the rules that have been held as to duct of the cashier as cashier, but to his general them.
character. It may be stated as a general rule that the bond The court said, “Ordinarily, the concealment, to of a cashier or other officer is an undertaking, not make void a contract, must amount to the suponly for honesty but for capacity, for reasonable skill pression of facts which one party is bound in conand diligence in the discharge of his duties, and if science and duty to disclose to the other, and in he fails in either regard, and in consequence the respect to which he cannot innocently be silent.” bank suffers, he and his sureties are liable to make Story's Eq. Jur., $ 204. But Judge Story lays good the injury. Minor v. Bank of Alexandria, 1 down further, that, in the case of a surety, concealPeters, 46; Commercial Bank v. Ten Eyck, 48 N. Y. ment of facts which go to increase his risk amounts 305; American Bank v. Adams, 12 Pick. 303.
to a fraud on the surety; and the omission to disAnother general rule is that perfect good faith close is equivalent to an affirmation that the facts be adhered to between obligees and sureties, and do not exist. Story's Eq. Jur., $$ 114, 215, 324, that whenever there is any misrepresentation or 383. But we think this doctrine of the text-books even concealment by the obligee from the surety as is stated much more strongly than the decided cases to any material fact which, had he been aware of, warrant. In Railton v. Matthews, 10 Cl. & F. 934, he might not have entered into the contract of surety- plaintiffs appointed an agent and took bond, they ship, he will be discharged. Rees v. Berrington, 2 knowing the agent had misapplied moneys in a forWhite & Tudor's Lead. Cas. 1871.
mer agency, and not communicating it. It was This rule was somewhat rigorously applied in contended that, to discharge the surety, the conGraves v. The Lebanon National Bank, 10 Bush, 23, cealment must be willful, and with a view to the wherein the Court of Appeals of Kentucky held advantage of the obligee. Lord Campbell, in dethe sureties on a cashier's bond discharged because livering judgment in the House of Lords, said it when the bond was executed the cashier was a de- would do to make the liability depend on the motive faulter, of which fact the directors might, and the of concealment; it was enough that the plaintiffs court beld should, have become cognizant, had they knew facts material for the surety to know and did used due care; but instead of which they had issued not disclose them ; the motive might have been a statement as the law required, wherein the affairs kindness to the agent; the effect would be the same; of the bank appeared to be well managed. This the fact that he was in arrear, and had been guilty statement it was thought might have induced the of fraudulent conduct, and was a defaulter, were sureties to become such, and it being a misrepresen- facts material for the surety to know. In a later tation they were discharged.
case (Hamilton v. Watson. 12 Cl. & F. 109), Lord On the other hand, in Tapley v. Martin, 116 Mass. Campbell, in delivering the judgment of the House 275, the Supreme Court of Massachusetts held that of Lords, said that it would put an end to the sureties on a cashier's bond were not discharged, Scotch practice of giving security for cash loans, if although the directors had been negligent in not it was necessary for the creditor to disclose every discovering frauds existing when the bond was thing material for the surety to know; and laid given; in other words, it was held that “unless the down this as the criterion whether the disclosure defendant (the surety) proved actual knowledge, should be voluntarily made by the creditor; 'whether by the officers, of previous frauds, the sureties would there is any thing that might not naturally be exnot be discharged; that negligence in failing to ex- pected to take place in the transaction, i, e., whether amine, however gross, would not discharge the there be a contract between the debtor and creditor, sureties."
to the effect that his position shall be different from In Atlas Bank v. Broronell, 9 R. I. 168; 8. C., 11 | that which the surety might naturally expect, but Am. Rep. 231, it was held in a suit on a cashier's that if there be nothing of this sort, then the surety, bond, that it was no defense that the directors had if he would protect himself, must inquire.' been negligent in examining his accounts. There “In North Brit. Ins. Co. v. Lloyd, 10 Exch. 523, the alleged negligence occurred after the bond was B, who was surety for a loan upon stock for A, apexecuted.
The defendants offered further to prove plied to the plaintiffs, before the loan became due, that prior to the execution of the bond the cashier to be released on procuring other surety, and plain
tiffs consented. A applied to the defendant to be- was the subject of the suretyship. In this case, the come surety, and represented that his stock would undisclosed information related, not to the business otherwise be sacrificed, but did not communicate the which was the subject of the suretyship, and not to fact that the former surety was to be released. The the conduct of the cashier, as cashier, but to his defendant testified, that if he had known that, he general character. It did not follow that because would not have become surety, but, on he gambled he would fail in his duty as cashier, and examination, admitted that he relied on the solv- the exceptions do not show that his actual delinency of Sir T. Branche,' the principal. In the quency had any connection with his gambling. The course of a desultory running argument between the directors may have deemed it advisable to demand court and counsel, the judges criticised the decision an increase of his bond because of his gambling; in Railton v. Matthews, as going too far, and say and so they might have deemed if they had learned that the point decided by Lords Campbell and Cot- he was keeping a fast horse, or speculating in the tenham in that case was, in effect, that it was not stocks. But would it have been their duty, unless necessary to render a concealment fraudulent, that inquired of, to impart their knowledge to the sureit should be made with a view to the advantage of ties? We think not, in the absence of a more conthe person concealing. The court hold that the fidential relation than that which is implied in the non-disclosure of the change of security would not mere giving and accepting of the surety-bond. If, vitiate the guaranty, unless fraudulently kept back, when there is no such confidential relation, the and that there was no ground in this case to impute sureties wish to have the obligees affected with a fraud; that the former surety might well wish to be duty to give such information, they should inquire released for other reasons than doubt of Sir T. for it. Otherwise, it may be supposed that they are Branche's solvency.
content with what they themselves know, or with “In the Franklin Bank v. Cooper, 36 Me. 179, the inquiries which they have made elsewhere." directors knew of the cashier's default, and took In Owen v. Homan, 8 Mac. & G. 378, the creditor bond from him to account for all property heretofore or obligee was held to be bound to make a full, fair intrusted to him, etc. Held, that the surety had a and honest communication to the surety of all cirright to presume that the transaction was in the or- cumstances connected with the transaction to which dinary course of business ; that the bank was bound the suretyship is to be applied, which are calculated to communicate facts increasing the risks, and which to influence the discretion of the surety in entering would have an important influence on the decision into the required obligation. See that case on apof the surety.
peal, 4 H. L. Cas. 997. Matters unconnected with “In the case of Bank of the United States v. Ett- the transaction of the suretyship need not be dising, 11 Wheat. 59, the United States Supreme closed to the surety unless he inquire concerning Court, being equally divided in opinion, the ques- them. Wythes v. Labenchere, 3 DeG. & J. 593. tion was not decided.
Mere negligence of a bank in detecting dishonest “We think that it is going too far to say that the practices of a cashier will not discharge his surecreditor is, in all cases, and without being inquired ties. There must be such negligence as in law of, bound to communicate every thing that it is im- amounts to a fraud on the sureties to accomplish portant for the surety to know, and that would in- that result. The distinction between mere negligence crease his risk. Under such a rule no one would and fraud on the part of obligees as to the liability ever know when he could rely on a bond, and it of sureties was clearly stated in United States v. would lead to a good deal of litigation. “We think Kirkpatrick, 9 Wheat. 720. That was an action on the safe rule is that, to avoid the bond, there must an official bond taken by the government. The be, on the part of the creditor, a fraudulent con- defense was neglect on the part of the collecting cealment, or withholding of something material for officer of the government to sue within the time the surety to know. Would the fact which the de- prescribed by law. The court, Story, J., delivfendant offered to prove, if proved, have amounted ering the opinion, said: “It is admitted that to a fraudulent concealment or withholding? It is mere laches, unaccompanied with fraud, forms no not alleged here that the directors withheld any in- discharge of a contract of this nature between formation inquired for, or said or did any thing private individuals; such is the clear result of which could have a tendency to mislead the surety, the authorities." The same distinction was apor made any, the least effort to induce the defend- plied to cashier's bonds in State Bank v. Chetwood, ant to become surety. If there had been an actual 3 Halst. 1, and in Taylor v. Bank of Kentucky, 2 default, and an attempt by the directors to cover it J. J. Marsh. 565; Morris Canal Co. v. Van Voorst, up, or reimburse themselves at the expense of the
1 Zabr. 100. surety, the case would be different.
So, in Minor v. Bank of Alexandria, 1 Pet. 61, it “Moreover, the cases which we have referred to was held that a usage of the board of directors to are cases in which the information withheld or not permit the cashier to misapply the funds of the disclosed related in some way to the business which bank would not exonerate his sureties. Story, J., who delivered the opinion of the court, said: “The he cannot afterward have recourse to the surety to question then comes to this, whether any act or vote make good any loss arising from the dishonesty of of the board of directors, in violation of their own the servant during the subsequent service. The duties and in fraud of the rights and interests of same principle was held in Sanderson v. Aston, L. the stockholders of the bank, could amount to a R., 8 Exch. 73, and in Burgess v. Eve, L. R., 13 Eq. justification of the cashier, who was a particeps
450. criminis. We are of opinion that it could not. In Black v. Ottoman Bank, 15 Moore's P. C. 472; However broad and general the powers of the direc- S. C., 8 Jur. (N. S.) 801, the surety on the bond of tion may be for the government and management of a bank cashier was held not to be discharged by a the concerns of the bank, by the general language
failure of the bank to use diligence in guarding of the charter and by-laws, those powers are not against the cashier's dishonesty that mere negliunlimited, but must receive a rational exposition. gence would not absolve the surety; and in Dawson It cannot be pretended that the board could, by a v. Lawes, Kay, 280; S. C., 23 L. J. Chan. 434, it vote, authorize the cashier to plunder the funds of was held that to discharge a surety for the due perthe bank, or to cheat the stockholders of their in- formance of duties, there must be on the part of terest therein. No vote could authorize the direct- the obligee an act of connivance or gross negligence, ors to divide among themselves the capital stock, amounting to willful shutting of the eyes to fraud or justify the officers of the bank in an avowed or something approximating it. There must be embezzlement of its funds. The cases put are something amounting to fraud to enable a surety to strong, but they demonstrate the principle only in a say that he is released from his contract on account more forcible manner. Every act of fraud, every of misrepresentations or concealments. Pledge v. known departure from duty by the board in con- Buss, Johns. (Eng.) 663. nivance with the cashier, for the plain purpose of A concealment by a creditor that at the time of sacrificing the interests of the stockholders, though the contract the principal debtor was already inless responsible in morals or less pernicious in its debted to the creditor in a considerable sum, of effects than the cases supposed, would still be an which fact the surety was ignorant, has been held excess of power, from its illegality, and, as such, evidence to go to the jury of such fraud on the void as an authority to protect the cashier in his surety as would discharge him. Lee v. Jones, 14 C. wrongful compliance. Now, the very form of these B. (N. S.) 386. See, also, Hamilton v. Watson, 12 pleas sets up the wrong, and connivance cannot for C. & F. 258; Smith v. Bank of Scotland, 1 Dow. a moment be admitted as an excuse for the misap- 272; Padcock v. Bishop, 3 B. & C. 605; Peel v. Tatplication of the funds of the bank by the cash- lock, 1 Bos. & P. 419; Squire v. Whitten, 1 H. L. ier.” The same rule was held in Amherst Bank v. Cas. 333; and the same rule would apply to sureties Root, 2 Metc. 522; Taylor v. Bank of Kentucky, 2 on cashiers' bonds as to concealments by the bank, J. J. Marsh. 565, and in Sparks v. Farmers' Bank, 9 In Lee v. Jones, supra, affd. on appeal, 17 C. B. Am. Law Reg. 365. So in Atlantic and Pacific Tele- (N. S.) 482, P. had been employed by the plaintiffs graph Co. v. Barnes, 64 N. Y. 385; S. C., 21 Am. Rep. in the sale of coal for them on commission, for 621, in an action upon a bond given by an employee which he at the end of each month gave them his to his employer conditioned that the former would acceptance, and by the terms of his agreement, he faithfully account for all moneys and property com
was to hand over to them within six days all moneys ing to his hands, it was held that the sureties were he received from customers. P. having fallen in not discharged from subsequent liability by an arrear to the extent of 1,2721., the plaintiffs required omission of the employer to notify them of a default him to find security to the amount of 3001., and at by the employee which was known to the employer his request the defendant consented to guarantee and a continuance of the employment after such 1001. The agreement of guaranty recited the terms default where it did not appear that such default of dealing between the plaintiffs and P.; but the arose through the fraud or dishonesty of the em- fact that P. was already indebted to the plaintiffs ployee. The court expressed the opinion that had in the large sum above mentioned was concealed the default arisen through the dishonesty of the from the sureties. In an action against the defendservant, a withholding of the fact from the sureties ant upon the agreement, he pleaded that he was inand the continuance of him in the service would duced to make it by the fraudulent concealment by have discharged the sureties.
the plaintiffs of a material fact: Held, that the nonThis was held in Phillips v. Foxall, L. R., 7 Q. B. communication by the plaintiffs to the defendant of 666, where on a continuing guaranty of the honesty the fact that P. was at the time indebted to them of a servant it was held if the master discovered was evidence for the jury in support of the plea. that the servant has been
in Farmington v. Stanley, 60 Me. 472, cited in the the course of the service, and instead of dismissing principal case, held that the failure of selectmen to the servant he chooses to continue him in his employ examine the accounts of a town treasurer as by without the knowledge and consent of the sureties, statute directed, or to detect an error in his accounts,
would not discharge a surety on his bond. This cashiers of such banks, in the absence of special audecision was put upon the ground that the select- thority from the directors, or of proof of a custom so
to do, had no authority to take such deposits; but as men were only agents of the town with limited
only two of the judges concurred in the opinion, it powers; that they had no authority directly to dis
cannot be said whether the case was decided because charge the sureties on the treasurer's bond and could
of lack of authority in the cashier to take the deposnot therefore do it indirectly.
its, or because there was no proof of gross negligence In the Board of Supervisors v. Otis, 62 N. Y. 88, for which only the defendant, being a gratuitous it was held that neither negligence nor malfeasance
bailee, would be liable.
Both the case of Wiley v. First National Bank, and of a board of supervisors in their transactions with
First National Bank v. Ocean National Bank, were a county treasurer would discharge the sureties on
approved in Third National Bank v. Boyd, 44 Md. the bond of such treasurer.
47; S. C., 22 Am. Rep. 35, but the point was not A cashier's bond (and the bonds of other bank in issue there. In that case the bank had taken officers are governed by the same rules) covers all bonds as collateral security for a debt and they duties annexed to the office from time to time, either
were stolen while yet in the possession of the
bank, although after the debt was paid. The court by law or by the directors, and the sureties are lia
held that the bank was not a gratuitous bailee, and ble for any default in such duties. Minor v. Bank
that it was liable if it had failed to exercise ordinary of Alexandria, 1 Pet. 46; Morris Canal Co. v. Van care. See, also, Weckler v. First National Bank, 42 Vorst, 1 Zabr. 100.
Md. 581; S. C., 20 Am. Rep. 95; and Second National The failure of a cashier to be sworn when that is
Bank v. Ocean National Bank, 11 Blatchf. 362.
In Chattahoochee National Bank v. Schley, 58 Ga. required does not vitiate his bond but is rather a
369, the Supreme Court of Georgia remarked that a breach of it. State Bank v. Chetrood, 3 Halst. 1.
National bank which habitually receives special deBut it is no forfeiture of a bond conditioned for the posits for safe-keeping, as matter of accommodation, faithful service of a cashier that a loss has occurred is bound by the act of the cashier in receiving such by mere accident or mistake. Morris Canal Co. v. deposits and liable for a loss thereof occasioned by its Van Vorst, 1 Zabr. 100. So it is a breach of a
gross negligence. The question was not, however,
before the court, cashier's bond for him to change, without authority,
In Lancaster National Bank v. Smith, 62 Penn. St. the securities of the bank. Barrington v. Bank of 48; and Scott v. National Bank of Chester Valley, 72 Washington, 14 Serg. & R. 405. It is a violation of
id. 471, the Supreme Court of Pennsylvania duty for a cashier to allow an overdraft. Bank of passed upon the liability of National banks for deposSt. Mary v. Calder, 3 Strobh. (S. C.) 403; or to
its for safe-keeping, but in neither case was the quescertify a check without funds; or that a deposit has
tion raised as to the power of such banks to take
such deposits. These cases turned on the question of been made when in fact none has been made, or to
negligence. In First National Bank v. Graham, 79 change without authority the securities of the bank.
Penn. St. 106, the same court held that while the mere Barrington v. Bank of Washington, 14 Serg. & R. voluntary act of the cashier of a National bank in re(Penn.) 405; to omit some duty required of him by ceiving special deposits for safe-keeping would not law, as to make a report to the Comptroller of the subject the bank to liability, yet if the deposit was
known to the directors and its retention acquiesced Currency, whereby the bank has been subjected to
in by them, or if there was a custom for the bank to a fine or otherwise injured. Bank of Washington v.
receive such deposits, the bank would be bound. Barrington, 2 Penn, 27. To violate any valid by- | This decision is in accordance with Foster v. Essex law the corporation may prescribe. Bank of Car- Bank, 17 Mass. 479, which is the leading case on the lisle v. Hopkins, 1 Min. (Ky.) 245. And in each case
subject. the sureties to the cashier's bond are liable.
In De Haven v. Kensington National Bank, 81 Penn. St. 95, it was held that whether or not National banks
have the power to take special deposits for safe-keepLIABILITY OF NATIONAL BANKS FOR DE
ing they are not liable for a loss of them unless they POSITS FOR SAFE-KEEPING.
have been guilty of gross negligence. See, also, Leach N Wiley v. First National Bank of Brattleborough, v. Hall, 31 Iowa, 69; First National Bank v. Pierson,
47 Vermont, 546, it was held that the taking of special 16 Alb. Law Jour. 319. deposits, to keep merely for the accommodation of the In Smith y. First National Bank, 99 Mass. 605, the depositor, is not within the authorized business of action was to recover the value of a special deposit for National banks; and that the cashiers of such banks safe-keeping, but the question of the power of Nahave no power to bind them on any express contract tional banks to take such deposits was not raised. accompanying, or any implied contract arising out of, The court held the defendants liable only for want of such taking. The doctrine of that case has been ap- ordinary care. This rule of liability is sustained by proved in several subsequent cases, but in pone of the decisions. Ray v. Bank of Kentucky, 10 Bush, them was the question directly presented. Thus, in 344; Dearborn v. Union National Bank, 58 Me. 273; First National Bank v. Ocean National Bank, 60 N. S. C., 61 id. 369, and cases cited in Scott W. National Y. 278, the case was expressly approved by Allen, J., Bank, 72 Penn. St. 471; First National Banke v. Grawho delivered the opinion of the court; but his re- ham, 79 id. 106. A bank is bound to take only ordimarks thereon were clearly obiter. There the defend. nary care of bonds pledged with it, as collateral secuant was held not to be liable for special deposits for rity. Jenkins v. National Village Bank, 58 Me. 275; safe-keeping, and the opinion took the ground that Dearborn v. Union National Bank, 61 id. 369.