The record-union., 1899-03-21

80
and this action was ratified. In this
view the testimony was properly ad-
mitted.
Was the act of securing the money
from the bank by Steinman and Alsip
the act of these persons as officers OF
the bank or of the Union Building and
Loan Association?
The money borrowed was by or for
no joint enterprise of the bank and the
Union Building and Loan Association,
but solely for the use and benefit of the
latter. The interests of the two con-
Germs in the transaction were antagonls-
tic, and SO far as the defendant bank is
concerned the interests of these two
men We're personal to themselves and
antagonistic to the bank. From the
evidence, it clearly appears that the
whole of the negotiations of borrowing
the money and pledging the securities
We're carried ON by Steinman and Als1p,
and mostly by Alsip, on the part OF the
Union Building and Loan Association
and its interests, ON the one hand, and
by Cummings and Whitbeck, officers of
the bank, and acting for the bank, on
the other hand.
Steinman and Alsip went to the bank
to borrow the $4,000. They found
Mr.. Whitbeck in charge and Informed
him they wanted to borrow $4,000
for the Union Building and Loan Asso-
citation for which they would hypothe-
cate the securities of the association.
Whitbeck (cashier) asked them if they
were authorized to do it. Alsip an
swered that the proper resolution had
;1i, IN
So. The cashier said he would consult
Mr.. Cummings who was at that time
the banks Secretary. After these two
bank officers had retired from the pres
ence and hearing of Steinman and Al
sip and consulted, they returned and
Mr.. Whitbeck said: "All right. Bring
over your securities" From this time
on Mr.. -Steinman seems to have had
nothing whatever to do with the nego-
tiations, which were thereafter carried
on by A1sip on the part of the Union
Building and Loan Association, and
Whitbeck and Cummings on the part
of the bank.
Alsip then brought or sent the Sc
curitieS to the bank and they were
examined by the bank officers, and
found to be good (they seem to have
made no investigation at all as to the
right of the association to pledge them).
The bank loaned the $4,000 1t seems
nothing whatever was said as to what
the money was to be used for. The
bank, corporation itself, was bound to
inform itself of the scope of the power
and authority of the Union Building
and Loan Association, a corporation.
Mr. Stni n q l.
though President, was not acting then
for the bank, but for himself, and for
the other corporation, and was not
bound to inform the bank of the powers
and duties of the Union Building and
Loan Association, and, therefore, the
knowledge of these things possessed by
Steinman is not notice to- the bank But
the bank should have informed itself.
From the facts and circumstances in
the case, it seems to me but justice to
Mr.. Steinman to say here, that what
ever mistake in law he may have made
in permitting the Union Building and
Loan to borrow money for the purpose
of paying off the sixth series when the
securities had not been valued at their
actual cash value, and permitting the
pledging of these securities, instead of
the shares of stock, or giving mortgage
on the real estate of the association, it
cannot be said he acted with any dis
honest motive. or performed a single
act with dishonest intent He held
about fifty shares of the sixth series,
which at the matured value amounted
to Sl0,O00 in money but instead of TAX
ing this money for his shares, he pre-
ferred to take the notes of the associa-
ton, proving conclusively his faith in
the correctness of all the transactions
leading up to borrowing the $40 900, his
faith in the solvency of the association,
as we'll as his honesty in every step
taken as the officer of the Union Build
ing and Loan. Design and dishonesty
OF purpose We're with Alsip, who was,
in fact, the manager of the associa-
ton, and in whom all seemed to have
explicit confidence.
AS has been seen. the Union Building
and Loan Association had no right to
borrow the $4,000, as it did, yet as the
association and its members have had
the benefit of the money and have not
paid it back the notes will not be turned
over to plaintiff
And as it appears from the testimony
that when any of these collaterals were
to be paid, Alsip, as the Secretary of
the association, came and took away
that collateral and brought back money
instead. which sum was credited on the
notes, the payments thus made will be
considered as a return of so much of
the S40,00O and the defendant bank
will be admitted as a creditor of the
Union Building and Loan Association
for the balance thereof
The general rule is that negotiable
instrument is good when received in
the due course of business, and that the
indorsee acquires an absolute title to
| the same. It is under this rule that
defendant maintains that the bank has
acquired title to the negotiable paper
among the securities deposited with il
as security for the money borrowed. II
seems to me this rule has no application
here, when we come to consider the
powers of the Union Building and Loan
or rather the want of power to pledge
its securities, and the general rule gov
erning all corporations, that corpora
tions cando only those things for which
power is specifically granted, or which
is Incidental. / repeat the defendant
bank was dealing with corporation
and was bound to know the extent OF
its powers.
| The securities having been pledged
without warrant of law must be re-
turned to plaintiff. The money col
lected and paid to the defendant on
these securities since this suit began
will also be returned to the plaintiff.
A. J. BUCKLES,
The Judge presiding.