Court Opinion

ID: 6407371
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:00.647746+00
Date Added: 2024-06-11T15:51:15.412241
License: Public Domain

Wilde J.
delivered the opinion of the Court. At the trial of this cause, after all the evidence on both sides had been introduced, the case, by consent of the parties, was taken from the jury, and submitted to the whole Court, on the report of the evidence ; it being then understood that there was no material fact in dispute for the jury to decide. But on the argument of the cause, it has been contended by the defendant’s counsel, that there is conflicting evidence as to the question of Thompson’s agency, which requires the intervention of a jury to pass upon, and that if it should so appear to the Court, a new trial should be granted. It is however agreed, that the Court may decide according to the weight of such conflicting testimony.
The defendant’s counsel rest their defence on two grounds : 1. That Thompson, in procuring the note from the defendant ■Lewis, was acting as the agent of the bank, and therefore that the bank must suffer the loss, if any arose from the fraudulent pledging of the note. 2. That if, in obtaining the note, he *30was not to be considered as the agent of the bank, still, as he was one of the directors of the bank which received the note as collateral security, his knowledge of the facts under which he procured the note, was in law the knowledge of the whole board of directors and the bank.
To maintain the first ground of defence, the defendant’s counsel rely upon the testimony of witnesses, who stated that Thompson, as well as the other directors of the bank, had acted as the agents of the bank in soliciting and procuring notes for discount for the benefit of the bank, at such times when money was plenty, and that such a practice had continued for a number of years previous to the transaction in question.
The plaintiff’s counsel object to this evidence as not admissible, but this objection cannot prevail, because no such question is submitted to the Court on this report; on the contrary, the case is submitted on all the evidence reported. The question whether such a usage is sufficient to bind the bank, on ttit» ground of an implied authority, is undoubtedly open for con sideration.
Supposing then, that the usage is sufficient to bind the bank, to the extent of an express vote of the bank authorizing the directors, or any one of them, to solicit and procure notes for discount, when money was plenty ; would such an authority to Thompson bind the bank in the present case ? We think clearly, that it would not. Thompson, in such a.case, would be the agent of the bank with limited authority, and if he exceeded his authority, and this was known to the party with whom he dealt, the bank would not be bound by his doings. That Thompson had no more than a limitéd authorty to bind the bank, (if he had that,) clearly appears from the defendant’s own showing. It was limited to times when money was plenty. When money was scarce there was no necessity for any such agency. That Lewis had knowledge of the limited extent of the supposed agency would be presumed, if there were no proof directly to that point ; for as he relies on usage to prove the agency, it must necessarily be so general as to justify the inference that it was generally known. But here is abundant evidence to show, that Lewis had knowledge of the usage, and of its limitation. He *31had had long dealings with Thompson and with the bank be- . ° . 6 . , r , , , lore this transaction, at times when money was scarce, and when it was plenty. This is proved by the testimony of Thompson, and is not contradicted by any other evidence. This, therefore, being a limited agency, as proved by the usage, it is clear, that Thompson was not the agent of the bank in the transaction in question.
But the case does not stop here. Thompson expressly testifies, that he did not act as the agent of the bank in soliciting and procuring the note in question ; and there is no contradictory evidence on this point. If then Thompson was the general agent of the bank, yet if be did not act as an agent, but for his own benefit, the bank would not be bound by his fraudulent conduct. There is no evidence to show, that Lewis dealt with Thompson as the agent of the bank; but there is very strong evidence to prove the contrary and to show, that at his own request, he became the agent of Lewis to procure the discount thereof at the bank. Soon after the note was delivered to Thompson, Lewis applied to him for security, and obtained several notes on which he has received about $ 1200 ; and for the residue he has recovered judgment against Thompison. He gave no notice to the plaintiffs of the fraud of Thompson, in order that they might secure themselves, which in good faith he was bound to do, if he had considered 'Thompson as their agent in the transaction. There is therefore no evidence that Thompson was the agent of the bank ; and he testifies that he was not, and that in no part of the transaction did he profess to act as such an agent.
As to the second ground of defence, we think it equally clear that it cannot be sustained. The argument is, that though Thompson was not the agent of the Bank, yet, as he was a director, his knowledge of the facts under which the note was procured, is the knowledge of the bank. If this argument could be maintained, it would follow, that if a director should procure a note to be discounted by the fraudulent concealment of material facts, which he was bound to disclose, or even by false pretences, the bank would have no remedy. If Thompson had been authorized to discount this note, and did discount it, the argument might hold good.
*32Whatever a director or other agent of a bank may do within the scope of his authority, would bind the bank so as to make them responsible to the person dealt with. But, in the present case, Thompson was the party applying for the discount, and was not acting as director, nor could he with any propriety so act. He was the party with whom the bank contracted in discounting the note, and to whom the money was paid ; and it is perfectly clear, that this ground of defence cannot be maintained. Fulton Bank v. New York and Sharon Canal Co. 4 Paige’s Ch. R. 127.
There was another question raised by the defendant’s counsel, which was perhaps sufficiently answered during the argument. It was argued that although the note in suit was pledged, not only as security for money advanced, but also for a prior existing debt, yet the plaintiffs are entitled to recover only the amount now due for money advanced. The cases cited do not support this position. If the security had been taken solely for the purpose of securing a prior existing debt, the cases would apply. But as the plaintiffs advanced a large sum of money partly for the purpose of securing a prior debt, they aro entitled to recover the whole amount of the note, provided it does not exceed the amount due for money advanced and tho prior debt for which it was pledged.

Judgment for plaintiffs.