Case Name: SMITH vs. PHILADELPHIA NATIONAL BANK
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1879-02-03
Citations: 1 Walk. 318
Docket Number: 
Parties: SMITH vs. PHILADELPHIA NATIONAL BANK.
Judges: 
Reporter: Reports of cases decided by the supreme court of pennsylvania which have been omitted from the regular reports
Volume: 1
Pages: 318–327

Head Matter:
SMITH vs. PHILADELPHIA NATIONAL BANK.
A balance standing on the books of a bank to the credit of one who is agent for plaintiffs can be recovered by the principal on proof of the agenoy.
A National Bank cannot act as broker for the sale of State bonds on commission.
Where the cashier sold bonds on commisssion, but signed different papers relative thereto as cashier and used paper with the bank heading, parol evidence •was admited to prove that it was an individual and not a bank transaction.
Error to Court of Common Pleas, No. 1, of Philadelphia Co.
The plaintiffs were contractors to build a railroad in Delaware and received Delaware State bonds as part of the consideration. The bonds were to be used in payment of the iron needed, and to facilitate that arrangement C. W. Wright, Esq., an attorney, was employed, who represented the plaintiffs and an iron company, and it was agreed that he should have the bonds, the proceeds to go to pay for the iron used, and the balance to the plaintiffs. On May 8, 1874, Smith, one of the plaintiffs, and Wright went to Philadelphia and saw B. F. Chatham, cashier of Philadelphia Na. tional Bank, who agreed to negotiate the sale of the bonds. It is a disputed question of fact whether Chatham did this indi vidually or as cashier of the bank. Four lots of bonds were left with Chatham to wit: $44,000, $4,000, $48,000 and $50,000, amounting in all to $146,000. The bonds were sold for $149,427.-96, with coupons collected. The account of Wright was credited with $142,008.33, and Chatham claimed the balance on account of commissions. The administrator of C. W. Wright testified that he made no claim to any of the money. Suit was brought by Smith and Carpenter against the bank for the balance of the proceeds. On May 10,1875, a non-suit was ordered. Smith and Carpenter then took a writ of error, No. 20| Jauuary Term, 1876, and on February 19,1877, the Supreme Court reversed the ruling of the Court below in the following opinion, per
Gordon, J.:
“The principles of this case are very simple, and require but little research for their elucidation. It is not doubtful that the bonds in question belonged to and were negotiated for the use and benefit of the plaintiffs, and the money thus obtained, was deposited with the defendant, the account being kept in its books in the name of Mr. Wright, agent of the plaintiffs. Assuming, then, what the facts, as now presented to us, warrant us in assuming, that a balance appears from those - books to be due to this agent, the question occurs, to whom does this balance belong ? whether the bonds were negotiated by Chatham in his individual capacity or as an officer of the bank, is, as the case now stands of secondary importance, for the defendant, having acknowledged that Wright was but an agent, necessarily holds the money subject to the order and control of his principals ; Girard vs. Taggart, 5 S. & ft. 19. Beyond this, however, the representatives of Wright, who is now deceased, set up no claim to this money, nor to any part of it, and certainly Dr. Chatham has -no standing to intervene. If he has any claim against the Plaintiffs for commissions or services of any kind, he may prosecute that claim in' due order, but neither he nor the bank for him, has a lien upon that which certainly is not now, and probably never was, in his possession. It follows, that so far-as the case now appears, the .defendant is unlawfully retaining the money from its owner.
“We may add that in our judgment the evidence indicates that Dr. Chatham was acting in the sale of the bonds as cashier of the bank, and not in his individual capacity. The correspondence throughout warrants this inference; it is conducted under the head of ‘ The Philadelphia National Bank,’ and signed ‘ B. F. Chatham, Cashier.’
“And more than this, a number of these bonds were placed with the bank as collateral security for advance loans, and certainly these were controlled by it and sold for its use. It is argued, however, that as the bank could not act lawfully as a bond broker, Chatham could not bind it by any undertaking of his to act for it. Admit this to be so. It is a good reason why the bank should not be allowed commissions upon the sales, but it does not follow that it cannot receive and sell such paper, if necessary, as a pledge for loans advanced in the prosecution of its regular business ; neither does this argument dispose of the fact that the bank did get and now holds the money of the plaintiffs.
“If, however, this question as to how Dr. Chatham was acting in the disposition of these bonds, becomes material, it must be referred to a jury, with all the testimony bearing upon it, including the balance sheet ruled out by the Court, if it be shown that that this paper is in any way connected with the transaction and properly involved in its history.”
Judgment reversed and a procedendo awarded.
During the second trial exceptions were taken by plaintiffs to evidence as follows:
Question. To B. F. Chatham. Is that the signature to letter of May 8, 1874, that it is your custom to use in your private and individual transactions ?
Answer. I have been a bank officer for twenty-five years and always sign my private and individual business letters in that way. That is the signature I habitually use, whether for official or private business. (First assignment of error.)
The Court below admitted testimony as to what was said by Wright and Chatham as to commissions in the absence of plaintiff's. (Second and third errors).
Question ; (to B. B. Comegys, V. P.) Had or had not the bank anything to do with this business, any interest or connection with it?
Answer. The bank had .no interest in this business whatever. (Fourth error.)
Plaintiffs offered to prove that the price of negotiating Delaware State bonds in 1874, as charged by brokers was J per cent. Objected to that it is not a question of commissions, none being claimed by the bank. Objection sustained. (Fifth error.)
Counsel for defendant in addressing the jury commented on deposit tickets, supposing them offered in evidence. Counsel for plaintiff objected. Defendant offered them in evidence. Plaintiff objected. Defendant then withdrew them and commented on course of plaintiff in objecting to their being offered in evidence. .Plaintiffs objected and excepted to the Court allowing the comments to be made. (Sixth error.)
The following points were presented and the answers form the subject of different errors as follows :
plaintiff’s points.
First. — An agreement of an agent without authority does not bind the principal. There being no authority shown in Custis W. Wright to allow $12,500 for the sale of bonds: his agreement, even if made, does not bind the plaintiff, and does not prevent their recovery in the present action.
Answer. — Not affirmed; as there are no commissions claimed by the bank in this case, the point is not applicable to the case. (Seventh error.)
Third. — That if the cashier has converted any portion of them to his own use without authority, the bank is liable if the bonds were received by the bank; or were receipted for by the cashier in his capacity as cashier.
Answer. — Affirmed, if the jury should find that this was a transaction with the bank and not with the cashier in his individual capacity. (Eighth error.)
Fifth. — That it is a -penal offence and contrary to the Statutes of this Commonwealth for the cashier of a bank' to engage in any other business.
Answer. — Affirmed so far as relates to cashiers of banks char, tered under the laws of the State of Pennsylvania. But such a violation, does not make the bank liable for his private business transactions, not within the scope of his authority as cashier. (Ninth error.)
Seventh. — That if the jury find, from the evidence that the bonds in question were pledged in the bank for a loan for the benefit of the plaintiffs, although the loan was made in the name of C, W. Wright, the verdict must be for the plaintiff’s.
Answer. — This point is not affirmed as put. There is no evi- . dence that the loan was made in the name of C. W. Wright. The evidence is that the loan was made by the bank to. B. F. Chat-ham. (Tenth error.)
Eighth. — The receipts for the bonds dated respectively May 8, 1874 ; May 19, 1874; June 8, 1874, and August 7, 1874, under heading of the Philadelphia National Bank, and signed B. F. Chatham, Cashier, with his official signature, as cashier of the bank, is the ordinary and only way in which a receipt can be signed for the bank, and if the jury so find, the verdict must be for the plaintiffs.
Answer. — This point is not affirmed as put. The matters referred to in this point are evidence for consideration of the jury. And in the absence of other testimony showing the relations subsisting between the plaintiffs’ agent, Custis W. Wright and B. F. Chatham, the jury would be justified in inferring that it was a transaction with the bank. The case is to be determined by a consideration of all the evidence in the case and not by particular parts of it only. (Eleventh error.)
Ninth. — The correspondence indicates that B. F. Chatham was acting in the sale of the bonds as cashier of the bank and not in his individual capacity. And if the jury find, the verdict must be for the plaintiffs.
Answer. — It is for the jury to find from all the evidence in the case whether it was a transaction with the bank or with B. F. Chatham in his individual capacity. If the jury find that it is a transaction with the bank, the plaintiffs are entitled • to' recover . otherwise they are not.' (Twelfth error.)
Tenth. — The correspondence throughout being conducted under the heading of the “Philadelphia National Bank,” and signed B. P. Chatham, cashier, is evidence that this was a transaction of the bank. And if the jury so find the verdict must be for the plaintiffs.
Answer. — The matter set forth in this point is for the consideration of the jury in connection with all the evidence in the case. If the jury find that the transactions in question were with the bank, then their verdict should be for the plaintiffs, othewise not. (Thirteenth error.)
dependant’s points.
1. A National Bank has no authority under the Act of Congress to act as broker for the sale of bonds on commission.
Affirmed. (Fourteenth error.)
2. No officer oí the bank has a right to bind his bank by contract to such act.'
Affirmed. (Fifteenth error.)
3. A contract to act as broker for the sale of bonds made in the name of the bank by its cashier would not bind the bank, not being within the line of his duty as cashier, nor within the line of +he legitimate business of such bank.
Affirmed. (Sixteenth error.)
4. In the absence of the evidence that the bank ratified or adopted any such contract made by the cashier, it would be liable only for money belonging to the plaintiffs remaining in its hands when the suit was brought, and if the proceeds of the bonds were paid to Mr. Wright before the suit, then there is no liability on that account.
Affirmed. (Seventeenth error.)
The Court also charged inter alia as follows:
“It is in the evidence that Dr. Chatham signs his name with C* alter it in the transaction of his private business as well as in his capacity as cashier. That this was evidence for the consideration of the jury in determining whether this was an individual transaction of Dr. Chatham or a bank transaction.” (Eighteenth error.)
“The mere fact that Dr. Chatham suffers himself to be addressed as cashier, to answer the correspondence on paper with printed headings of the ■ bank and copies his letters in the books of the bank is not.conclusive evidence to contradict it.” (Nineteenth error.)
' “It is a fact to be considered by you that Mr. Smith says 1 asked Dr. Chatham what ‘he’ was going to charge, not what the bank was going to charge.” (Twentieth error.)
November 15th, verdict for the defendant.
Plaintiffs then took a writ of error to No. 208 January Term, 1878, assigning the foregoing twenty errors,- and
D. C. Harrington, Esq., for them argued.
As to, the first .error, the evidence contradicts the writings and is inadmissible; Coxe vs. Derringer, 28 P. F. S. 271, 292. The bank is supposed to know what is in it letter books, and is estopped from denying that the bank is bound. Kentucky Bank vs. Schuylkill Bank, 1 Parsons Eq. Cases, 265-6; Chapman vs. Chapman, 9 P. F. S. 218; Fitter vs. Commonwealth, 7 Casey 406; National Bank vs. Graham, 29 P. F. S. 120; Wayne vs. Commercial National Bank, 2 P. F. S. 343, 352, Story on Agency, Sect. 452.
As to the second and third errors ; Wright was only an agent, and his declarations made after the arrangement was completed do not bind the principal; Hannay vs. Stewart, 6 Watts 487; Wilt vs. Vicker, 8 Watts 229; Magill vs. Kauffman, 4 S. & R. 321; Hough vs. Doyle, 4 Rawle 294; Story on Agency, Sect. 170. Dr. Chatham cannot make evidence in his favor by declarations in the absence of plaintiffs; Levering vs. Rittenhouse; 4 Wharton 131.
As to the fifth error; plaintiffs should have been allowed to show that the usual commission for selling Delaware bonds was one-quarter of one per cent, as bearing upon the question whether an honest conscientious lawyer would have agreed to allow -a commission of $12,500 when the usual commission was $365. Besides if incompetent evidence has been admitted on one side, it may be rebutted by evidence of the same kind. Morris vs. Travis, 7 S. & R. 220.
As to sixth error; Counsel had no right to argue to jury as to anything not in evidence ; or to comment on the reason of the opposite side objecting to what is not in evidence; Stewart vs. Bank, 11 S. & R. 270; Tucker vs. Henniker, 41 N. H. 317; Berry vs. State, 10 Geo. 511. The proper course is to except; Lee vs. Lee, 9 Barr 169; Wilkins vs. Anderson, 1 Jones 399.
As to the seventh error; the Court should have affirmed this point, because testimony as to commissions had been admitted ; besides the pleadings were so framed that the bank could not set up this defence ; and the court should have stricken out the evidence which was improperly admitted; Penna. R. R. vs. Butler, 7 P. F. S. 338.
As to ninth error; it is made a misdemeanor for a cashier to engage in these transactions and plaintiffs were entitled to have the instruction, as bearing upon the question of the probability of the cashier’s having been engaged in this business in his individual capacity. Purd. Dig. 333 pl. 93; Young vs. Robertson, 6 Phila. 184; Burkholder vs. Beetem, 15 P. F. S. 496; National Banks are subject to State laws; Everitt’s Appeal, 21 P. F. S. 216.
As to tenth error; the Supreme Court said when the case was before them that the evidence indicated that Dr. Chatham was acting as cashier of the bank; and that a number of bonds were placed with this bank as collateral security for advanced loans. It was error therefore to say there was no evidence of a loan to Wright for use of plaintiffs. It is errór to withdraw a question of fact from the jury. Nieman vs. Ward, 1 W. & S. 68; Rife vs. Galbreath, 3 P. & W. 204; Holden vs. Winslow, 6 H. 160; Bovard vs. Christy, 2 H. 267; Keeler vs. Vantuyle, 6 Barr 250; Bergner vs. Thompson, 24 P. F. S. 168; Tenbrooke vs. Jahke, 27 P. F. S. 392; Elkins vs. McKean, 29 P. F. S. 493; Madara vs. Eversole, 12 P. F. S. 160.
As to eleventh error; a party is entitled to a clear instruction on the law. Slaymaker vs. St. John, 5 Watts 27; Tenbrooke vs. Jahke, 27 P. F. S. 392. The construction of the paper was for the , court, it was error to'leave the jury overturn the written contract on parol evidence. Roth vs. Miller, 15 S. & R. 100; Gass’ Appeal 23 P. F. S. 39-46; Albert vs. Zeigler, 5 Casey 50; Penna. R. R. Co. vs. Shay, 1 Norris 198. The testimony of the cashier should not be admitted to contradict his written receipt. Coxe vs. Derringer, 28 P. F. S. 271; Bank of Kentucky vs. Schuylkill Bank, 1 Parson’s Eq. Cases 180, 234, 238, 240, 241, 242, 251, 260 & 265. The charge tended to mislead the jury; Kissinger vs. Thompson, 12 S. & R. 44; Hersheaur vs. Hooker, 9 Watts 455; Relf vs. Rapp, 3 W. & S. 21; Wenger vs. Barnhart, 5 P. F. S. 303; Gregg Township vs. Jamison, 5 P. S. F. 468; Penna. R. R. vs. Berry, 18 P. F. S. 272; Stall vs. Meek, 20 P. F. S. 181, 182.
As to the twelfth and thirteenth errors ; the plaintiff asked the court to charge in the words of the Supreme Court when the case was here before.
As to the fourteenth error ; the bank could sell these bonds. Revised Statutes, U. S., 999 Sect. 5136, page 1012, Sect. 5201; Leach vs. Hale, 31 Iowa 69; Van Leuvan vs. First National Bank of Kingston, 6 Lansing 373, Rev. Stat. U. S., p. 1002 Sect. 5153. Bank has a right to take them as security. Hotchkiss vs. National Bank, 21 Wall 354. They are negotiable instruments, Mercer County vs. Hacket, 1 Wallace 83; Texas vs. White, 7 Wallace 700; Vermilye & Co., vs. Adams Express Co., 21 Wallace 138.
As to fifteenth error ; the cashier is the financial agent -of the bank and his acts bind the bank; Wakefield Bank vs. Truesdell, 55 Barb 602, 605; Bissell vs. First National Bank of Franklin, 18 P. F. S. 415; Burnham vs. Webster, 19 Maine 232; Badger vs. Cumberland Bank, 26 Maine 428; Merchants Bank vs. State National Bank, 10 Wallace 604.
If the contract can be valid under any circumstances, an innocent party in such a case has a right to presume their existence, and the corporation is estopped to deny them; Merchants Bank vs. State National Bank, 10 Wallace 644, 645 & 646, and authorities there cited. Loans made by a National bank in excess of amount allowed by a law are not void; Shoemaker vs. Bank, 2 Abb. U. S. 416; Stewart vs. Bank, 2 Abb. U. S. 424. Where a bank received bonds on deposit and returned them to the wrong person, it is liable to the owner; National Bank vs. Smith, 12 P. F. S. 47.
As to the remaining errors ; the charge was misleading and should be remedied. See authorities before cited.
Richard P. White, Henry Wharton and E. M. Hunt, Esqs., contra.
The cases cited by plaintiff are those in which the officer acted expressly for the bank ; here that is the very question of fact in dispute. The court did not admit the testimony as to commissions, but it came in incidentally, in letters and testimony tending to show that it was an individual not a bank transaction. The cashier had no implied authority to bind the bank in such a a transaction; United States vs. City Bank of Columbia, 21 Howard 364; United States vs. Dunn, 6 Peters 51; Foster vs. Essex Bank, 17 Mass 479; Lloyd vs. West Branch Bank, 15 Penna. 172, Bank of Carlisle vs. Graham, 29 P. F S. 106; Wiley vs. Bank, 14 Am. L. Reg. 342 and note, also 47 Verm 546; Bank of Lyons vs. Ocean Bank, 60 N. Y. 278. The bank has not authority to do a brokerage business; Bank vs. Collector, 3 Wallace U. S. 512; Fowler vs. Scully, 22 P. F. S. 461; Talmage vs. Pell, 3 Selden 328; Weckler vs. Hagerstown Bank, 14 Am. Law Reg. 610, 42 Maryland 589.

Opinion:
The Supreme Court affirmed the decision of the lower court on February 3rd, 1879, in the following opinion :
Per Curiam.
We are of the opinion, that the main question in this case, was a question of fact, fairly submitted to the jury. There was no evidence that the bonds in question were pledged in the bank for a loan for the benefit of the plaintiffs, in the name of C. W. Wright. The evidence was that the loan was made by the bank to B. F. Chatham. It was for the jury to say upon a consideration of all the evidence, whether Chatham was acting in the sales of the bonds as the cashier of the bank, and not in his individual capacity. If the plaintiffs in error have any cause of complaint, it is with the verdict of the jury, and not with the rulings, answers or charge of the court.
Judgment affirmed.