Court Opinion

ID: 8267787
Source: CourtListenerOpinion
Date Created: 2022-10-16 19:13:11.895275+00
Date Added: 2024-06-11T16:43:25.320917
License: Public Domain

The opinion of the court was delivered by
Dixon, J.
In 1874, Louis Dovell was, and for a long time had been, the .receiving-teller of the First National Bank of Newark. About December 22d of that year he disclosed to the president and two directors of the bank that his accounts were short nearly $90,000, and offered to convéy to the bank his own property, :and to procure from his mother, Mary A. Dovell, a conveyance to the bank of her property, because of this deficiency. On the following day, such conveyances were made to two of the directors, who afterwards conveyed the property to the bank. In June, 1880, the bank failed, and Garret A. Hobart was appointed its receiver under the laws of the United States by virtue of which it was organized. In March, 1881, Mary A. Dovell filed her bill in the court of chancery against the receiver, *564praying that an account might be taken of the transactions between her son and the bank, and that if it should appear that her son had not taken any of the funds of the bank wrongfully, then the receiver should reconvey to her such property as he still had of- that conveyed by her, and should pay to her whatever the bank had realized from the residue thereof, or if it should appear that Louis Dovell was indebted to the bank by reason of his having wrongfully taken its moneys or funds, then such reconveyance and payment should be made after deducting the amount of that indebtedness. The receiver’s answer, in terms, avers that the. conveyances were absolute and that he claims absolute title to the property, but it admits that the transfer was made “ to indemnify the bank for losses arising by reason of the said deficiency,” and “ for the purpose of enabling the officers of the bank to dispose of the property for the best price they could obtain, and apply the proceeds thereof towards the satisfaction of the said deficiency.” Proofs having been put in, the cause was argued before the vice-chancellor, and three main questions were there presented: 1st, whether the conveyances were absolute; 2d, if not, for what purpose were they made; and, 3d, whether the complainant was entitled to an account and to a reconveyance and payment in case of a surplus after satisfying the purposes of the transfer.
The vice-chancellor decided that the conveyances were not absolute, that they were made for the purpose of securing a restoration to the" bank of such moneys, funds or property as Louis Dovell himself had embezzled, abstracted or misappropriated, and that, since the evidence failed to satisfy him that Louis Dovell had personally abstracted anything from the bank, the receiver should at once reconvey to the complainant the property which he retained, and should account for and pay over to her all moneys realized by the bank from the residue.
Hence this appeal by the receiver.
We agree with the learned vice-chancellor that the conveyances were not absolute. The answer, in effect, admits this, and’ the testimony makes it clear.
But.we do not think the purpose of the transfer was so restricted-*565as it was deemed in the court below. Our conclusion is that it was designed to indemnify the bank, not only for funds abstracted by Dovell himself, but also for all of the deficiency for which he was civilly responsible. To this effect is the affidavit of the complainant herself, annexed to her bill. She executed the deeds at the instance of her son, and on consultation with him alone, and in narrating the interview between them that led to the conveyance, she says:
“He stated to me that he had not taken or misapplied any of the funds of the bank, nor any of its securities or property, and that as soon as an examination of his accounts could be had, and it could be determined whether he should be charged with any of the said deficiency or not, there should be a settlement between me and the bank, and in case there was no deficiency chargeable to him, I should get back whatever I furnished as security; or if it was found that he was liable for any part of it, I should get back the security upon the payment of that part for which he was liable.”
So, in her testimony, she says the transfer was made until it •could be found out “ whatever deficiency or whatever it was there might be against him,” for the purpose of securing to the bank “ whatever they brought against him.” Of similar import is the evidence of the son, when he says he told the directors, speaking of the shortage in his accounts, “ If it is through anything I have done, why, I am willing to make it perfectly good, and will secure you until you can find it out.” The evidence of the directors engaged in the transaction indicates that they understood the conveyances as being intended to meet the deficiency, no matter how it had occurred, or rather as one conceded to have been occasioned by the teller’s default alone, but we think this inference was hardly warranted in its unconditional form. The circumstances of the teller’s disclosure certainly gave rise to a strong suspicion of personal delinquency in him commensurate with the apparent loss, but they are not to be regarded as conclusive.
The testimony hitherto produced indicates that the deficiency arose, in whole or in great part, from the embezzlement, by the cashier, of moneys in the hands of Dovell, the teller. Some of the cashier’s transactions were of such a nature that it is difficult *566to believe that the teller was not apprised of their dishonest or unauthorized character, yet nevertheless he lent himself to theirfurtherance by actually delivering to the cashier the moneywhich he asked for, and concealing the facts beneath false statements in his accounts. For knowingly assisting in such an-abstraction, the teller would be as responsible to the bank as if he had spent the money himself. He was an officer of the bank, having certain prescribed duties, for the faithful performance of which he was bound directly to the corporation. No orders of the cashier could exculpate him in the breach of those obligations. Within the scope of the cashier’s authority, and so long as he was apparently acting on behalf of the corporation, the cashier’s directions might control the teller, and the latter might not be-required to look beneath the surface of his superior’s acts. But when he was led to believe that the cashier was violating his own duty to the bank, and was taking the bank’s funds forhis own ends, irregularly, and without authority from the directors, the teller had no more right to aid in or connive at such misappropriation than if it were being perpetrated by a. stranger. The same principle would hold if the embezzler were-a director or the president. Such misconduct on the part of Dovell we think the evidence tends to establish in more than one instance; and so far as it helped to effect a loss to the bank, he -is answerable.
Until the amount of this deficiency is determined, there should be no reconveyance..
We are therefore of opinion that it should be ascertained, by reference to a master or by an issue triable before a jury, how far the misconduct of the teller contributed to the deficiency, and to that extent th'e bank is entitled to re-imbursement out of the property transferred. The receiver should render an account of this property and its proceeds, and return the surplus, if any.
Let the decree below be reversed, and a decree be entered in accordance with these views.
For affirmance — Knapp, Reed, Van Syckel, Whitaker
*567For reversal — The Chief-Justice, Depue, Dixon, Magie, Parker, Scudder, Cole, Paterson — 8.