Court Opinion

ID: 4929634
Source: CourtListenerOpinion
Date Created: 2021-09-24 01:05:37.990041+00
Date Added: 2024-06-11T08:14:25.366842
License: Public Domain

Appleton, J.
—If a surety having security for his liability should surrender the same, or, if having an opportunity to obtain indemnity, he should omit obtaining it in consequence of receiving information from the creditor, that the debt for which he was liable, is paid, he is discharged from such liability, though the creditor was in mistake, the debt not having been paid. Baker v. Briggs, 8 Pick. 123; Waters v. Creugh, 4 Shu. & Per. 410.
Corporations and individuals are alike subject to the general rules of law. The facts which would discharge a surety, where the creditor is an individual, should have the same effect where that relation is sustained by a corporation.
*538Individuals can act personally or by the intervention of agents. The action of corporations is by a vote of the corporate body and by their duly appointed agents.
The duties of a cashier are well defined and clearly understood. He is the principal agent of the bank, through whom communications relating to its' business transactions are made. The notes or bills deposited with, or discounted by the bank are in his custody and under his control. All payments are made to him, and vrhen notes or bills are paid he delivers the same to the party by whom such payments are-made.
If notes or bills, whether deposited or discounted, are not paid at maturity, it is his duty to notify the indorsers or cause them to be notified, and if he neglects this duty, the bank is liable for his omission.
The indorser or surety is bound to perform the contract of his principal, when notified of his failure. If bound to pay, he must have a right to know at any time, the then present condition of his liability. The note or bill, though not paid at maturity, may since have been paid in whole or in part. The bank may have taken collateral security and upon payment by an indorser, he is entitled to all the rights of subrogation. Whether there is collateral security or not, he is entitled to the possession of the note or bill when paid by him as evidence of his rights- against his principal, or against those who may have preceded him as indorsers.
The indorser or surety may well claim to know at any time the then present condition and extent of his liability j to ascertain his rights and duties, so that he may be in a condition to claim the one and perform the other. The cashier is the individual, who has the rightful custody of the paper discounted, and to whom payment is to be made, -The books of the bank show what has been discounted and what payments have been made, and are under his control. The cashier is therefore the officer of the bank, to whom application is to be made by a party interested, to ascertain at any time the then condition of his liability.
*539In giving the desired information, the cashier, when called apon for that purpose at the bank, may give his recollection or he may examine particularly, the books of the bank, and state the result of such examination. It is for him to determine the degree of attention he will bestow upon the subject matter before him. Whether the information given is the result of a more or less careful examination, whether it be verbal or in writing, the same rule as to its admissibility must apply. If his official certificate would be evidence, his declarations at the bank during banking hours to one interested and having a right to inquire must be equally admissible. If injurious consequences result from negligence, falsehood or fraud in the communications made, and a loss follows therefrom, it should be borne rather by the bank than by one whose only fault it is, that he relied upon the statements of its accredited agent.
The inquiry in this case was made of the cashier at his regular place of business during banking hours, and while he was in the exercise of his official duties. It was made by one having an interest in the inquiry, or by his agent. It was made of the cashier as an officer of the bank, and because he was such officer. The information given by him was given while in the transaction of his official business, and not by him as an individual. I cannot regard this other than the acts of an agent in and about the business of his agency, and within the scope of his official duty. It is the ascertainment of the present relation of a supposed surety to the bank, whether a liability formerly existing still remains. It is not a statement of the past, but a present transaction relating to the proper business of the bank. If then the cashier is to be regarded as acting officially in giving information to a surety rightfully inquiring of him at the bank of the then present condition of his liability, the same consequences should result against the bank from this information, if erroneous, as would result in case the cashier had been the owner, against him.
If the surety with the money of his principal should pay *540the note or draft upon which he is liable at the bank, and in banking hours, it would not be questioned that the cashier in receiving it, was acting in the discharge ' of his duty as such officer. If the surety with the money of Ms principal should, at the same time and place, offer to pay such money and should receive the information of such cashier that the note had been paid and surrendered to the principal, he would be equally acting officially as if he received the money and applied it to the discharge of the note or draft upon which the person paying it was liable. If in such case, acting upon the information thus received, the surety should surrender bis security to his principal, it will hardly be contended that another and different rule should exist where the claim is held by a corporation, than would obtain if the cashier had been the owner and had made the same statements. So if the surety, having ample indemnity for his protection, should apply to ascertain whether it will be required or not, and should be told that the note or bill was paid, and in consequence thereof should give up to his principal the property wMch he would otherwise have appropriated to its payment; is it easy to perceive why the bank should be exempted from the operation of those rules of law which in a similar case would have discharged such surety had the note ^belonged to the cashier?
Neither the declarations of the holder of the note, when he is an individual, nor those of an agent, when, as in this case, his principal is a corporation, are conclusive. If the information thus given is erroneous, and no injury should result from it, or if the error should be seasonably corrected; the bank should not suffer. The principle upon which the surety is relieved, is that his condition has been injuriously affected by the wrongful or negligent acts of the bank or its agent. If no such injury has arisen, then the grounds upon which the surety rests his claim for exoneration from liability, no longer exist.
The cashier is not bound to answer impertinent inquiries; or to satisfy idle curiosity. The surety may apply person*541ally or by agent. If any question as to the authority of the agent to' make the inquiries should arise, the cashier may withhold the information until he shall be reasonably satisfied they are made at the instance and in behalf of the party interested.
Whether the bond of the cashier would, in this and similar instances, protect the bank from the consequences of his neglect, must be determined by the language the parties may have used in drafting it. It may or it may not. Whether the action of the cashier in a particular case, was or was not within the scope of his authority, depends upon the extent and limits of his agency, rather than upon the peculiar form of indemnity which he may have given his principal.
Tfie bank is bound to know the character of its officers. It holds them out as entitled to confidence. If they, are negligent, unfaithful or dishonest, it should suffer the consequences of such negligence, unfaithfulness or dishonesty. Any other result would relieve the bank from the effects of the misconduct of its agents and impose them upon strangers, who have no choice in their selection nor control over their action.
The questions involved in the decision of this case are of no slight importance. For this cause, I have deemed it expedient briefly to state the reasons which have induced me to dissent from the conclusions to which the majority of the Court have arrived.