Court Opinion

ID: 6863174
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:51:17.846459+00
Date Added: 2024-06-11T16:05:16.780547
License: Public Domain

KENNEDY, District Judge
(dissentr ing).
I regret that I do not find myself in harmony with the conclusions expressed in the prevailing opinion. A dissenting opinion is not only ordinarily fruitless, but is usually meaningless, unless some reason is given for the dissent. An outline of all of the evidence as set forth in a record containing some 250 pages would be impracticable, and yet a reading of the entire record is largely necessary to a proper disposition of the case. In the opinion of the court the statement of facts has been necessarily and commendably condensed, but I think there are other facts not mentioned or but lightly touched upon which should be brought more prominently into the picture.
„ The defaulting agent, Jordan, for a period of two years before his fall, enjoyed the very highest reputation in the community where he did business with the appellee bank, taking an active part in civic, religious, and other affairs of the city. No suspicion of irregularity in regard to his business relations arose in the minds of any one until he voluntarily went to his employer and confessed his defalcations. He had done business at the bank for a period of two years, borrowing money and pledging stocks and securities of different kinds, sometimes of his own ownership. No word ever came from his employer to the bank which questioned the right of Jordan, its agent, to handle its stock sales transactions in his own way, nor was any objection made to- the fact that for two years he had handled all the funds received from stock sales as his own and transmitting his remittances to his employer in any manner in which he saw fit. He was regarded highly by his employer and praised by reason of the fact that he was able to qualify *739in the $250,000 class of a stock salesman. By his customers as purchasers of stock, he was likewise trusted, in that he was armed with powers of attorney which enabled him to handle their stock in such manner as he might choose. While there is testimony of another agent that these instruments were taken for the purpose of canceling the stock in the event it was not paid for when delivered, there is nothing in the evidexice that the bank officials had notice of this limited purpose. The bank officials, however, did know in handling the stock that these powers of attorney were present and they were certainly evidence of consent on the part of the purchaser of the stock for Jordan to handle it. The bank received no compensation out of the transactions except exchange and its interest on the float while the drafts were out. Jordan had done a quarter of a million dollars’ worth of business through the bank on account of his agency without any irregularity in any way until the transactions occurred which are the basis of this suit. Many of these manifold transactions involved signatures on stock certificates. On the face of it the most outstanding element, tending to signify carelessness on the part of the bank cashier, was in witnessing signatures which Jordan represented to be genuine but later proving to be his forgeries. In the first place, it was no part of the cashier’s duty as shown by the record to witness such signatures as genuine and therefore any act of the cashier in volunteering this service would be ultra vires and should not bind the bank. I think the cases cited so hold. But considering it as a fact, it does no more than to demonstrate the good faith of the bank and its confidence in Jordan, who represented the signatures as genuine. There is no evidence that any bank official ever saw Jordan forge the name of a certificate holder. Jordan, the agent, came from the penitentiary and testified for the plaintiff in the case, but I believe that under such circumstances where there is a discrepancy between his testimony and that of the bank officials, I would prefer to resolve the benefit of the doubt in their favor rather than in favor of the embezzler and crook.
In an analysis of the situation, I rely upon American Surety Co. v. Citizens’ National Bank (C. C. A.) 294 F. 609, in which the same learned judge who here renders the opinion, spoke for the court in that case. Sound principles were there laid down which I believe are applicable to the case at bar. The rule which applies between a bank and its depositors bringing about the relationship of debtor and creditor is not applicable in a case like this. Before a surety may sue a third party with whom he has no conti'actual relations, it must appear that there was negligence on the part of the third person which contributed to the loss and that he must have participated with notice in the illegal act which brought about the loss. The right of subrogation is an equitable right and where equities are equal the light does not exist and no relief should be given. I am unable to say that from the entire record in this case there is a showing of negligence on the part of the bank which should entitle the surety company to recoup its losses from it.
It seems to me an anomalous situation, where an employer has absolute confidence in its agent, where the agent’s customers and purchasers of his stock have absolute confidence in him to the extent of giving him powers of attorney, where the entire community in which the agent resides and transacts his business has entire confidence in his integrity over a period of years, and where the same general line of business transactions was carried on by the agent with the bank over a period of years in which no discrepancy or irregularity appeared, that the bank should be stuck for the loans accruing through his defalcations upon the meagre showing of irregularities in this case. Our own experience teaches that agents of various kinds, sales agents, insurance agents, and the like, do business with banks in their own names, handling collections and disbursing agency funds in the regular coxirse of business. I think it is a harsh rule which makes the bank suffer the loss under the circumstances revealed in this case, instead of the surety company which made its contract for a consideration to respond to such a loss.