Court Opinion

ID: 6243117
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:50:04.376081+00
Date Added: 2024-06-11T08:58:15.688077
License: Public Domain

Opinion by
Mr. Justice Green,
If the present action bad been brought by L. B. Doty to whom the note is suit was given, as a matter of course, there could be no recovery. It was a part of his written agreement with the defendant, that the note should be returned if he, Doty, failed to obtain sufficient subscriptions to enable the syndicate he Was trying to form, to purchase a controlling interest in the Bedford Springs Company. He did fail to accomplish that object and he also failed to do everything else that he agreed to do in the contract, by means of which he induced the defendant to give him, so unwisely, the note in suit. That L. B. Doty was guilty of a vile fraud in his action with reference to this note is too plain for argument. He had the note discounted very soon after it was given to him, and put the proceeds in his pocket without any right and kept them, never gave the defendant the position he agreed to give him, never assumed any responsibility for any part of the note as he agreed to do, and in short gave nothing to the defendant having any value, in return for the note.
But all of this is of no advantage to the defendant as against this plaintiff unless it had notice or knowledge of the agreement between L. B. Doty and the defendant. If it did have such knowledge through some officer for whose acts and whose knowledge it is responsible, then it was not an innocent holder for value, and took the note subject to the same defenses as the defendant had against L. B. Doty from whom it received the note. Did the plaintiff bank have such knowledge? The defendant swears that he had an interview with E. S. Doty the cashier of the plaintiff when the original note came due, in company with L. B. Doty, and that a conversation then took place which he describes as follows: — “ I went to the Bedford Bank with L. B. Doty and we went back in the back room inside the bank, and with the cashier and L. B. Doty I explained and we talked the matter over; the cashier said he knew of the agreement, and knew that the note was not to be discounted, but that his brother was obliged to make use of this paper as he was handling a great deal of this stock ; and I told him that our original agreement had fallen through, that neither of us could perform the parts we had agreed to, and especially as Doty had violated his part of the agreement, not keeping the note that I *581couldn’t renew, couldn’t go on; they solicited me then to renew to their advantage simply as an accommodation to them. . . . Q. Did E. S. Doty state to you that he knew of this agreement from its start? A. He did.”'
If the jury believed this testimony, a question would have arisen whether E. S. Doty had acquired his knowledge of the original agreement between L. B. Doty and Stever in the course of the transaction with the bank, to wit, the discounting of the note. If he did we think the bank was chargeable with his knowledge. We held in Bissell v. First National Bank of Franklin, 69 Pa. 415, that, “ An incorporated bank has a president, cashier and a board of directors, and the cashier is the general executive officer to manage its concerns in all things not peculiarly committed to the directors by the charter, and he is the agent of the corporation and not of the directors.” We decided in that case that the indorsement of a draft by the cashier of a banking firm bound his principals.
In Stockdale v. Keyes, 79 Pa. 251, we held that the knowledge of a member of an unincorporated banking firm, of the facts relating to the issue of the note held by his firm, was knowledge of his firm and prevented them from being considered as innocent holders.
That the knowledge of an authorized agent acquired in the course of a given transaction within the scope of his authority, is the knowledge of his principal is too familiar a doctrine to require argument in its support.
In this case the knowledge of the plaintiff’s cashier, if acquired in the course of the transaction which resulted in the discounting of the original note, would be the knowledge of the bank and would deprive them of the position of innocent holders for value.
In addition to that fact it was proved by the testimony of the plaintiff’s president, and of E. S. Doty, that the latter was chosen cashier on Jan. 12, 1892, and that prior to that time the cashier was L. B. Doty, the person who procured the original note of Feb. 12, 1892, from the defendant. It was also proved that at that time and afterwards L. B. Doty was one of the stockholders of the plaintiff bank, to a large amount. It was also proved that no certificate of stock in the Bedford Springs Company was ever delivered to the defendant, but such a certifi*582cate for 100 shares was in the possession of E. S. Doty who said he got it from his brother L. B. Doty, and that he was holding it for the benefit of his, L. B. Doty’s, indorsement. His testimony is somewhat confusing in regard to this stock and the manner in which it was held, whether as collateral security for the bank, or if not, in what other way. The witness was unable to explain why he asked the defendant to execute an assignment of the stock to the bank, and testified at considerable length upon cross-examination, on this subject. Without commenting now in relation to that matter, we think the whole of the testimony should have been submitted to the jury for their consideration.
The learned court below withdrew the case from the jury and gave them a binding instruction to find for the plaintiff for the whole amount of the claim, on the ground that the plaintiff was an innocent holder for value before maturity. We think this was error.
We observe that the note in suit contains a clause waiving the benefit of the exemption laws. Perhaps this may not impair its negotiability. We do not decide whether it does or notas the question was not raised. We reverse the judgment on the second, third, fourth and fifth assignments, the first being without merit.
Judgment reversed and new venire awarded.