Case ID: ad_66/html/0131-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Chase, J,:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John Hall, Appellant, v. Frederick I. Baker and Others, Respondents.
    
      Libel — the members of a committeee are not liable for an article published by their attorney in connection with a statement authorized by them — Penal Code, § 601, does not apply to private bankers -r- “ individual ” bankers and “ private ” bankers distinguished.
    
    Where a committee of the creditors of a private banker, who has made a general assignment, employs an expert accountant to make an examination of the affairs of the banker, and, after hearing the report of the expert, the committee decides that the latter should make a statement from his report and that such statement should be published, and authorizes the attorney representing the committee to publish such statement, and the attorney, without the knowledge or authority of the committee, writes an article containing libelous charges against the banker and tbe latter’s former partner, and procures it to be published in connection with the expert’s statement, without the knowledge or authority of the committee, the persons libeled may maintain an action against the attorney but not against the members of the committee.
    Section 601 of the Penal Code, providing, “An officer, agent, teller or clerk of any bank, banking association or savings bank, and every individual banker or agent, and any teller or clerk of an individual banker, who receives any deposits knowing that such bank, or association, or banker is insolvent, is guilty of a misdemeanor,” related only to a bank, banking institution or individual banker subject to the supervision of the Superintendent of Banks and required by law to report to such superintendent, and does not apply to a private banker.
    An “ individual” banker is a person who, having complied with the statutory requirements, has received authority from the Banking Department to engage in the business of banking subject to its inspection and supervision and to the burdens imposed.
    A “private” banker is a person or firm engaged in banking without having secured any special privileges or authority from the State.
    Appeal by the plaintiff, John Hall, from a judgment of the Supreme Court in favor of- the defendants, entered in the office of the clerk of the county of Washington on the 12th day of March, 1901, upon the dismissal of the complaint by direction of the court as to the defendants Isaac J. Finch, Charles A. Vaughn and Henry C. Clements, and upon the verdict of a jury as to the defendant Frederick I. Baker, and also from an order entered in said clerk’s office on the 30th day of January, 1901, denying the plaintiff’s motion for a new trial made upon the minutes.
    The action is one to recover damages for a libel of the plaintiff by the defendants. The complaint alleges that on of about the 9th day of October, 1899, the defendant's maliciously composed and published, concerning the plaintiff, in a newspaper called the" Fort Ann Republic, published at Fort Ann, N. Y., an article containing these false and defamatory words: “ Your. committee being convinced that John Hall and J. Melvin Adams were guilty of grave crimes in connection with the banking business of John Hall & Co., and the failure of said firm, sotightm the 'usual and proper way to have the matter considered by the Grand Jury sitting at 'Salem September 25th-29th, but failed for reasons obvious to those present at Salem during the time specified* the principal of which was the failure of the assignee to produce the. books and papers until Friday evening, just before the adjournment, of the jury, which he had been subpoenaed to produce on Monday. •
    “"We believe that such failure was.a miscarriage of justice improperly procured, but request that all criticism be reserved.”
    ■ The defendants' appeared by one attorney, but the defendant Frederick I. Baker answered sejiarately from the other defendants. The defendant Baker.admitted the publication of the alleged libel, and that the same was written by him. He denied malice and alleged that the matter stated in the complaint was a • part only of "the article published, and that the article as a whole was not false" or defamatory. The answer of the other three defendants denies that they composed or published the alleged libelous article, and also sets up Other matter in defense.
    In 1813 John Hall, Orson W.. Sheldon and Howland Fish entered into a copartnership' as private bankers at ■ Fort Ann, FI. Y. ' The original capital was $30,000.' Hall put in $10,000, Fish .$10,000,. and Sheldon and Hall $10,000. Ih 1814 or 1815 Fish retired, drawing out something over $10,000. The copartnership then consisted of Hall and Sheldon' -until July 1, 1889, when Sheldon withdrew and' J: Melvin Adams took his place. Sheldon drew out $5,035, being what he called his" interest. This was done'by crediting A'darns with "the'amount and his paying it to Sheldon.' Adams never put in to exceed $500. '
    On August 8, 1892, Hall, told Adams in substance that he was • indorser on various notes that he thought might make him trouble, and that if he (Adams) would assume all thé liabilities of the bank and care for Mrs. Hall in case she outlived him, he would turn over the entire concern to him (Adams). He said he wanted to fix it so that the bank would be all right. .Hall’s account was thereupon credited with $10,000, his capital -in the. bank; $3,923, called his share of profits, and he was charged with notes held by the bank on which he was indorser, and also certain overdrafts for which he was liable, amounting to $9,904.24. He gave to Adams a check for about $3,000 as a present, and another of $1,000, which he said should be placed to capital account, and the balance went into the profit account. The $1,000 entered in capital account was never drawn out by Hall, but was subsequently charged to profit account. The firm name of John Hall & Co. was never changed. Hall was away from Fort Ann for about one year prior to August, 1898, when he returned. Hall found Adams ill at his house and he went to see some of the debtors of the bank and consulted with an attorney about Adams making an assignment. A general assignment was made by Adams to Orson W. Sheldon, but deposits were received at the bank during the day the assignment was made. By direction of Hall they were entered in the pass books of the depositors, but were not put upon the books of the bank. Thereafter, all of the deposits made at the bank that day, with one exception, were returned to the-depositors. Subsequently, the creditors met and a committee was appointed in the interest of the creditors, and such committee employed one Gallian, an expért accountant, to make an examination and he reported at length to the creditors’ committee. The defendant Frederick I. Baker acted as attorney for the committee. At a meeting of the committee, when the report of .Gallian was read, it was decided that Gallian should make a statement from his report and that such statement should be published. Baker was authorized to publish the statement so to be prepared by Gallian.
    The statement was prepared and delivered to Baker. Some time thereafter Baker, without the knowledge of either of the other defendants, wrote that part of the article published which is quoted in the complaint, and the same was published in connection with the statement of Gallian.
    
      C. H. Sturges, for the appellant.
    
      Edgar Hull and Edgar T. Brackett, for the respondents.
   Chase, J,:

' There is no evidence in the record sufficient to uphold a finding that the alleged libelous matter was read in the presence of the' defendants before the creditors’ committee, or that the defendants or either of them, other than the defendant Baker, ever authorized or directed the publication of such alleged libelous matter. It was solely the. act of Baker. Baker was not the attorney of the committee for the purpose of publishing libelous matter, nor for the purpose of preparing for publication any matter whatever. The preparation and publication of the alleged libelous matter was not in the line of his employment. Had Baker been directed to prepare an article for publication, and in doing so had exceeded his authority as to the matter to be included in the article, some of the authorities cited by the appellant would be applicable. The testimony in regard to Finch arranging with the proprietor of the paper for the publication of the report referred to the report only, and not to the additional matters published; nor is the evidence by which it is claimed by the appellant that the defendants, other than the defendant Baker, ratified and approved the article as published sufficient to justify such conclusion. It is not shown that the defendants Finch, Vaughn or Clements ever circulated the paper in which the publication was made, or assented to the matter in any manner whatsoever. What they did related wholly to indemnifying the publisher of the Fort Ann Republic and was not an approval of the words' published. The dismissal of the complaint as against the defendants other than the defendant Baker was right. The trial Court submitted to the jury the case as against the defendant Baker, and in doing so expressly stated that the particular crime which it was alleged was committed by the plaintiff, and which the article charged was committed, is defined by section 601 of the Penal Code, and then read the same to the jury. He further said to them, in substance, that if they found that the plaintiff continued to be a member of the firm down to the time of the failure, that they must find that' he knew that the bank was insolvent when . the deposits were received on the day of failure, and that he violated section 601 of the Penal Code. He further charged the jury in substance that if lie was not a member of the firm, but that if Adams placed Hall in control of the bank, and Hall assumed direction of the bank as agent of Adams, and directed that deposits be received knowing that the" bank was insolvent, his acts came within the provisions of the section' quoted.

The exceptions taken to the charge, together with the statement made by the appellant when testimony was offered in regard to the receipt of deposits on the day of the assignment, are sufficient to raise the question before this court as to whether John Hall & Co. were included within the provisions of section 601 of the-Penal Code.

Section 601 of the Penal Code is as follows: An officer, agent, teller or clerk of any bank, banking association or savings bank, and every individual banker or agent, and any teller or clerk of an individual banker, who receives any deposits knowing that such bank, or association, or banker is insolvent, is guilty of a misdemeanor.”

Section 609 of the Penal Code is as follows:

§ 609. Private banker using sign.— Any person engaged in ¡banking in this state, not subject to the supervision of the superintendent of banks, and not required by law to report to such superintendent who was not engaged in such banking before Hay 23, 1885, who
“ 1. Uses an office sign at the place where such business is transacted, having thereon any artificial or corporate name, or other words indicating that such place or office is the place or office of a bank; or,
2. Uses or circulates any letterheads, bill-heads, blank notes, blank receipts, certificates, circulars or any written or printed paper whatever, having thereon any artificial or corporate name,' or other word or words indicating that such business is the business of a bank;
“ Is guilty 'of a misdemeanor.”

It is plain from a reading of these sections of the Penal Code that section 601 relates only to a bank, banking institution or individual banker subject to the supervision of the Superintendent of Banks .and required by law to report to such superintendent, and does not in any way refer to a private banker. The distinction between an individual banker and private banker is well known and recognized in all our statutes and by the decisions of the court. In Perkins v. Smdth (116 N. Y. 441) the court say: “ Since- the passage of chapter 363, Laws of 1840, the term : individual banker ’ has been frequently used in our statutes and reports and has acquired a definite meaning. It denotes a person who, having complied with the statutory requirements, has received authority from the banking department to engage in the business of banking subject to its-inspection, supervision, and to the burdens imposed. (People v. Doty, 80 N. Y. 225, 228.) Private bankers ’ are persons or firms-engaged in banking without having any special privileges or authority from the state. (People v. Doty, supra.) Words having a precise and well-settled meaning in the jurisprudence of a country are to be understood in the same sense when used in its statutes unless a different meaning is unmistakably intended.”

This case was presented to the jury and decided by them upon an erroneous theory, and the judgment as against the defendant Frederick I. Baker must be reversed and a new trial granted herein as against him. The judgment herein as against the defendants Finch, Vaughn and Clements affirmed, and as against the defendant Baker-reversed, and a new trial ordered as against him, without costs to-either party in this court.

All concurred, except Smith, J., not voting.

Judgment and order as against the defendants Finch, Vaughn and Clements affirmed, and as against the defendant Baker reversed,, and a new trial granted as against him, without costs to either party in this court.