Court Opinion

ID: 8184526
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:06:49.274457+00
Date Added: 2024-06-11T16:40:22.031729
License: Public Domain

Pinney, J.
1. It is perfectly well settled that the mere fact that an officer of a corporation acquires knowledge of facts when not acting for it does not charge or affect the corporation with knowledge of those facts in any transaction between such officer and the corporation in respect to which he acts solely for and represents his own interests. "Where an officer or agent of the corporation himself deals with the corporation, it will not be charged with notice of the information which he possesses relating to the transaction, and which he does not disclose; for the reason that in such case he does not represent the corporation, but is acting for himself, and ceases, pro hac vice, to act as an agent of the corporation. The corporation, in such case, is' in *383reality the adverse party, and the officer does not act for it as its agent at all. Mechem, Ag. § 729; Morse, Banks, 125; Manufacturers’ Nat. Bank v. Newell, 71 Wis. 314; Bank of U. S. v. Davis, 2 Hill, 451; Cragie v. Hadley, 99 N. Y. 131; Seneca Co. Bank v. Neass, 5 Denio, 329, 337; Innerarity v. Merchants' Nat. Bank, 139 Mass. 332; Barnes v. Trenton G. L. Co. 27 N. J. Eq. 33. When, therefore, Day deposited, either by himself or by his clerks and servants, moneys collected by him in his private loan business to his private account (the tellers of the bank acting for it as its agents in receiving it), the bank ivas not affected or charged with knowledge that Day possessed as to the ownership of the money, and that he might not deposit it to his private account and use it as his own. In these transactions Day did no act whatever on the part of the bank, and he did not participate in its behalf, so far as the case shows, in them in any manner whatever. The sole representatives of the bank were its tellers, and they were the proper and competent representatives in that behalf of the bank. It was not essential that the president or cashier should have been present at the time the deposits were made. The tellers were not only innocent of any wrong, but of any knowledge of such, and the knowledge that Day had while engaged in wrongfully converting the funds in question cannot, for these reasons, be imputed to the bank. Mayor, etc. of New York v. Tenth Nat. Bank, 111 N. Y. 457; Constant v. University, 111 N. Y. 610.
The cases relied on by the appellant’s counsel really sustain this conclusion, and it is decisive of the case. If, in making the deposits in question, Day, as president and general manager, had in fact represented and' acted for the bank, instead of its tellers, and for himself as well, the bank would have been affected and charged with notice of his wrongful use of the funds in question. Such, in substance, was held in the case of Atlantic Cotton Mills v. Indian *384Orchard Mills, 147 Mass. 268; and of First Nat. Bank of New Milford v. New Milford, 36 Conn. 93. In the case of Loring v. Brodie, 134 Mass. 453, the law is well stated in relation to the act of a cashier of a bank in receiving securities for it, and whether the knowledge he had at the time affected the bank. It was there said: “ If he [the cashier] received the securities with the knowledge that they were wrongfully transferred and were the property of others, his knowledge must affect the bank. His attitude and relation were such that it was his duty to communicate this information to the bank, and it cannot be deemed that he was a mere channel of transmission, and that his knowledge -affected only himself. Although he was the attorney of Brodie in taking care of and managing the trust property, he was the cashier also of the bank, and there was a confidence reposed in him as such which makes his knowledge the knowledge of the bank. . . . The only authority the bank could have to hold or sell them [the securities] was under the contract made by or through, FuUer, its cashier.” In that case, Fuller, acting for the bank, owed it a duty to communicate the knowledge he had, or act accordingly; but in this case Hay, in making the deposits in question, owed the bank no duty whatever to communicate to it the real ownership of the money deposited, any more than a mere stranger, and for that reason the bank is not charged or affected with his knowledge of the ownership of the money and of the fiduciary character in which he had received and held it. The fact that he was president and general manager of the bank, therefore, is immaterial, because he did not do, or assume to do, any act in such capacity in relation to the receipt and deposit of the moneys in question, but acted solely in his private and personal capacity. The case of Holden v. N. Y. & Erie Bank, 72 N. Y. 286, is in entire conformity with the view we have taken of the transactions in question. *385In that case the bank was held responsible for the fraud of its president to the extent it had profited by it, because he acted in behalf of the bank in all the transactions in question, and it was held that the bank was affected by his knowledge, although acquired in a continuous dealing, made up of a long series of previous transactions. Page 292.
The fact that Day conducted a loan business, collected moneys for others, deposited only in the Plankinton Bank, and kept no separate account, was not of itself notice to the bank that he was violating any fiduciary or trust relations in the conduct of his business, or that he did not promptly pay oyer to the proper parties all moneys received by him in a fiduciary capacity.
2. It is not made to appear by the agreed statement that William Plankinton, as assignee of the Plankinton Bank, took or received or owns or holds, in his capacity as as-signee, any property or assets of any kind into which the moneys, or any part thereof, collected by Day for the petitioner, were converted; nor is it made to appear that the bank had any general fund or moneys which passed to the assignee by the assignment, into which the petitioner’s moneys were traced as forming a part thereof. The money in question having been collected by Day in a fiduciary character, and paid by him to his own account, the petitioner for whom he so collected it could follow it, and might have a charge on the balance, if any, in the hands of the bank, and so long as the trust property could be traced and followed into other property into which it had been converted, that would remain subject to the trust; and the court will go as far as it can in thus tracing and following trust money, but when, as a matter of fact, it cannot be traced, then the right of the real owner to follow it fails, for the right to so follow and trace it has its basis in the right of property. These views are in accord wdth and supported by the recent case of Nonotuck Silk Co. v. Flanders, *386ante, p. 237, wherein the entire subject is fully considered, and the principal authorities are collated and considered in the opinion of Mr. Justice Cassoday. A reference to this case only is necessary. It is there laid down that “all such cases turn upon the question of fact whether the trust property or fund, or the proceeds thereof, are traceable into any specific property or fund.” The case is wholly destitute of any allegation or statement that any of petitioner’s money remained on hand at the time of the assignment in specie, or as forming a part of any general fund, or that it had been converted into any other specific property which passed to the assignee. It further appears beyond dispute that all the funds deposited in the bank by Day belonging to the petitioner, and constituting the amount of his claim, were drawn out by Day upon his checks before the assignment ; that when he commenced to make such deposits his account was largely overdrawn, and so continued until after he ceased to make deposits and until the date of the assignment, when the amount of his overdrafts was over $30,000, notwithstanding, in the meantime, he had been credited on his account with discounts of his individual notes to the amount of $65,000. Having deposited the petitioner’s money to his private account, he had a right to withdraw the money, and the bank was bound to pay it to him on his demand. This would be a restoration of it to the fiduciary custody of Day. There is nothing to show that the bank acted in bad faith in paying it out on Day’s checks, and, so long as the bank did not participate in any breach of trust, there is no liability on its part for the money. It was the duty of the bank to pay on the checks of the depositor so long as no other person asserted a claim to the money; and, where there has been no participation on the part of the bank in any breach of trust, it is too late for the real owner of the fund to make any claim against the bank after it has all been paid out on the checks of the *387depositor. Morse, Banks, 300; National Bank v. Insurance Co. 104 U. S. 54; Gray v. Johnston, L. R. 3 H. L. 1, 14; Munnerlyn v. Augusta Sav. Bank, 86 Ga. 333.
It is plain, for these reasons, that the petitioner has no claim whatever against the property and assets of the Plankinton Bank in the hands of its assignee.
By the Court.— The order of the circuit court is affirmed;