Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1872-06-04
4isftllaaeons.
IxPoRrANf SUIT AGAINST A BANK.

IMPORTANT SUIT AGAINST A BANK.
The following abstract Of a suit tried in the
Supreme Court Of the State Of Ohio, sitting
at Cleveland, in which the Second Nstiopsi
Bank Of Cleveland was the defendant, and
one Captain Dowling depositor and regular
customer Of the bank, WAS plaintiff, will be
read with interest," from the principle involved
in the issue-"Are banks responsible for the
moneys Of depositors embexxled by bank Off.
cials!' The title and. eircumssaaces of the
case are A. follows: ,19Iaia5SA ss1lE7
Bowling vs.. Second National Bank of
Cleveland. The plaintiff Gan old Ystired sea
captain,) having great faith ia the character
and stability of the Second National Bank Of
Cleveland, deposited with the cashier, JefFer.
son c. Buell., in 1867, $40, 900 of government
bonds as special deposit. From time to
time he would call to cut off his Coupons and
collect his interest. In the fall of 1869, about
the middle Of November, the Bank having
accumulated a surplus Of over Ave hundred
thousand dollars beyond the regular dividends.
the Directors notified the cashier Of their in.
tention to make deposition of this SURPLUS
and appointed the day for the examination
&c. Immediately after this notifications the
cashier committed suicide, leaving letter
addressed to the President or directors, I'd.
vising them that he had embezxled of the
funds Of the bank about SAT- 600, from some
time in the spring Of 1869 up to the time Of
his death. The heaviest losses were jbcurTed
in June. and were by reason Of speculation
in stock and grain-the former in New York,
the latter in Chicago. This embezxlement,
he stated, embraced the bonds Of Captain
Bowling. amounting to $4,000, a. we'll as
about S2l 900 of special deposits belonging
TO other parties. 1gee
After the death of Buell., the cashier, Cap-
ia all tho he, -
about his bonds, when he was advised by the
President that they had been embezzled BY
their late cashier, but that the bank wsre re.
sponsible fer the loss and would either bur,
chase new bonds or give him their equivalent
This was entirely satisfactory to the Captain,
but he asked for some acknowledgment from
the President, who replied that IL was not
necessary, and that his word could be taken
and was good for SlO, 600, to which the plain
tit assured him it was, and for ten times that
amount. On the gath of November the Board
of Directors met, and by unanimous reso-
luton agreed to make good ell Losses incurEed
by reason Of the embezzlement, and at once
in order to prevent litigation, and as matter
Of policy at that juncture in their Affairs. On
the lst of December following they addressed
a circular to the stockholders, detailing the
losses by reason of the mbezzlement, en-
bracing the special deposits. which deducted
from their total surplus, would still leave
about $50, 900. After the resolution of No.
vember "a Captain Bowling called upon the
President of the bank, who made known to
him its tenor, and which was satisfactory.
The plaintiff, however, feeling that the bank
had sustained a very heavy loss, and as he
was in no particular need Of the bonds or their
equivalent just at that time, suggested to the
President that if it would be any acconmoda-
ton to the bank they nigh defer delivering
him his bonds or their equivalent until the
10Th of December. For this offer he was
gratefully thanked by the President, and it
was accepted. Subsequently, the Captain was
advised by the President that the Board Of
Directors had reconsidered the matter, and
were not going to give him either his bonds
or equiv alent Without he could obtsin redress
by law. No other remedy being left the
Captain instituted suit for the amount. The
first trial resulted in a verdict in bis favor TO.
the full amount cSimed. Upon a second trial
the jury disagreed, and the present trial WAS
therefore the third.
The line of defence adopted by the bank was
that they were not liable for the loss, as no
consideration had been paid for the care and
custody of the bonds, and again, that as the
cashier had stolen them, the act was in the
scope of his employment During the pro-
gress of the trial the loss OF the bonds was
proven, as also the resolution Of November
"a and circular of December l, and the prom
ise made by the President to Captain Dowling
to restore the bonds or their equivalent. Upon
these facts there was no dispute. The plain
tiff proved that in March, 1869, the account
between the Second National Bank and its
correspondent in New York was about $780,
600, and that subse gently to that time various
discrepancies had been reported by the New
York correspondent. 1t was also proven that
in bQr hara a. ~
circulating in Cleveland that the cashier Of the
Second National Bank had been speculating
in stock and lost heavily. The amounts stat
ed varied from $1,000 to $4,000. In Sep
tember, 1869, the Comptroller of the Cur
rency addressed letter to the President of
the bank complaining of irregularities re-
ported against the Second National Bank by
the Bank Examiner, and expressing the be-
lief that the cashier was not performing his
duties as the law required, at the same time
recomme nding the Board of Directors to pay
more and better attention to their duties in
future. During this period nearly all the
prominent directors were absent in Europe,
and the President left the almost exclusive
management TO the cashier; not q single
monthly examination had ever been made BY
the directors. from March, 1869, to the period
when the cashier committed suicide, the suorn
monthly statements having been made upon
the representations OF the latter entirely. In
response to the letter Of the Comptroller the
President replied-First, that all the directors
were men over fifty years of age; that they
were all men Of large wealth, worth more in
the aggregate than the directors of all the
other banks in Cleveland combined; that this
bank WAS their special pride; and pointed to
its enormous surplus as an evidence Of good
management. When the general bookkee
of the bank was examined he was asked a. to
the discrepancy in the New York account IN
March, 1869, of Sl00, 900, how it occurred,
and if, when 1t came to his notice, he had re-
ported il to the President or Board Of Direct
ors. lie stated that he had made known the
fact TO the assistant cashier only, but that it
was all made right the merit month; in what
way he did not attempt to explain. when
asked as to other discrepancies he said they
existed, but the September and October state
ment he did not examine until November.
He was asked If the statements were rendered
monthly. and, If so, why he did not report
upon them. He assigned as reason that he
was very much hurried and had not time to
take them up promptly. The PRECEDENT Of the
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