Court Opinion

ID: 8847662
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:02:39.925605+00
Date Added: 2024-06-11T17:05:23.695817
License: Public Domain

LACOMBE, Circuit Judge.
The retaining of the balance standing to the credit of the Bank of Red Cloud on the day of its failure was not a transfer of deposit, within the meaning of section 5212, Rev. St. U. S., which apparently contemplates a transfer by the insolvent hank. Bank v. Colby, 21 Wall. 613. The deposit had been pledged (assuming the contract of February 1, 1890, to be valid) long prior to the commission of the act of insolvency, as collateral to secure the payment of the loans made to the Bank of Red Cloud by defendant. Neither the subsequent insolvency of the bank, nor the appointment, of the receiver, destroyed the lien of defendant, nor its right to dispose of the pledge to satisfy the *822debt thus secured. Scott v. Armstrong, 146 U. S. 510, 13 Sup. Ct. Rep. 148. The agreement by wbich deposits with the defendant were pledged as collateral security for the discounted notes does not appear upon its face to be the contract of the Bank of Red Cloud, but the evidence is sufficient to show that such an agreement was made between the defendant bank and Shirey, the president of the Red Cloud Bank, professing to act on its behalf. It is true that no express authority from the board of directors to make such an agreement is shown, but the contract is not an unusual one, and authority to make it máy be established by proof of the course of business, by the usages and practice which the directors may have permitted to grow up in the business of the bank, and by the knowledge which the board of directors must be presumed to have had of the acts and doings of its subordinates in and about the affairs of the corporation. Mahoney Min. Co. v. Anglo-Californian Bank, 104 U. S. 194. The evidence in this case abundantly shows that the board left it to the president, as their agent and the bank’s, to negotiate loans, and make such contracts as to repayment and security as are lawful and usual, — sufficiently so, at least, to bind the bank ,in such transactions with third persons, when the bank has received the benefit of such contract, without objections, for more than a year. Martin v. Webb, 110 U. S. 7, 3 Sup. Ct. Rep. 428.
Whatever set-off or counterclaim may arise from the transactions between the two banks is equitable, and this court would have no right to grant it in an action at law, such as this is. Scott v. Armstrong, 146 U. S. 512, 13 Sup. Ct. Rep. 148. But, independently of any set-off, the particular deposit sued for is pledged for a specific purpose. It is only such balance of it as might be left after the lien upon it is satisfied that either the Bank of Red Cloud or the receiver is entitled to; and that, as the evidence shows, is nothing. Verdict directed for defendant.