Savannah Bank & Trust Co. v. Hartridge

Blandford, Justice.

The record makes this case: Milo Hatch was the cashier of the Savannah Bank and Trust Company, and wishing. to procure money from the bank to purchase Central Rail*227road and Banking Company stock, he applied to A. L. Hartridge, who knew that, according to the rules of the-bank, an officer of the bank could not become its debtor. It was agreed between them that Hartridge should purchase two hundred shares of Central Railroad stock, and that Hatch, as such cashier, should advance to Hartridge the money to pay for the same, it being the bank’s money, and that Hartridge should give his note to the bank for’ the money, and deposit the stock of the Central Railroad as collateral security for the payment of his note to the bank. This was done, Hatch assuming the payment of Hartridge’s note, and the stock deposited being his. It does-not appear that the bank knew of this arrangement between Hatch and Hartridge, except the knowledge of Hatch,. the cashier, who made this arrangement contrary to the rules of the bank, of which Hartridge was cognizant. It is also shown that, soon after the giving of the note sued, on, Hartridge went to Hatch and advised him to sell the stock deposited, when Hatch agreed that Hartridge might use his own discretion, and do as he thought best about the matter. Soon thereafter, Hartridge effected a sale of this stock on time. Hatch was informed, and he refused to confirm this sale and to deliver to Hartridge the stock. It does not appear that any officer, or other person, connected with the bank, knew of this transaction but Hatch, the cashier. If this sale by Hartridge, of the stock deposited as security for his note due the bank, had been effected, the money arising from said sale would have paid, all of Hartridge’s note, except twenty-nine hundred dollarsAfterwards, the bank sold this stock, and it failed to pay Hartridge’s note by seven thousand nine hundred dollars— the amount claimed to be due on Hartridge’s note by the-bank. The bank brought suit on this note against Hart-ridge. He pleaded

(1.) The general issue.

(2.) That the note was without consideration ; that the-same was taken by the bank with the understanding that: *228he was not to pay the same, but that the bank was to look •alone to Hatch for the payment of the same.

(3.) He pleaded recoupment and set-off, claiming that the hank authorized him to sell the stock deposited, which he did, and that the bank refused to deliver afterwards, to consummate the sale, whereby he lost five thousand dollars, which he asked to set off against plaintiff’s claim.

The jury found the issue on the third plea in favor of Hartridge. On the other pleas they found the issues in :favor of the bank. The plaintiff moved for a new trial on many grounds, which the court overruled, and this judgment the plaintiff excepted to, and error is assigned thereon ‘to this court.

The contract between Milo Hatch, the cashier of the bank, and Hartridge being contrary to the rules of- the 'bank, and the same being known to Hartridge, was illegal, ,and the bank was not bound thereby, unless it had notice •of the same and authorized it, or in some way ratified it. In order to bind the bank by such a contract, it should be : shown affirmatively either that the bank authorized such a contract or with full knowledge of the same, ratified it. The fact that Hatch, the cashier, who was a party to this Illegal contract, knew it and ratified it on behalf of the bank, will not do; it must be shown that other'persons, who were authorized to act for the bank, knew of this contract :and either authorized or ratified the same; otherwise the bank: will not be bound. To hold otherwise would be to lay down a rule which might ruin every moneyed institution in the land. 5 Wallace, 703; 95 U. S. R., 557; Story on Agency, §210; 25 N. Y., 293; 1 Kelly, 286; Morse on Banks and Banking, 196, 197, 188, 189, 89, 90, 131.

We think the court should have granted a new trial in 'this case, because Ave not only think the court erred in his instructions to the jury as to the law which governed the third plea, but that the verdict of the jury is wholly without evidence to sustain it. There is not a particle of evidence that Hartridge ever applied to any one connected *229with the bank for leave to sell the stock deposited as security for the payment of his note, or for a transfer of this stock to the persons to whom he had negotiated to sell it, except Milo Hatch, the cashier, and the person who had, with Hartridge, entered into this illegal contract. As to the bank, it held Haf tridge’s note and the stock pledged for its payment unaffected by any arrangement between Hart-ridge and Hatch. If Hartridge-desired to sell the stock, he should have redeemed it, or placed other collaterals in its stead, such as the bank might have agreed to take. Jones on Pledges, §§606,728, 729 ; 65 Ga., 305. The verdict of the jury being without evidence to support it, the court should have, granted a new trial.

Judgment reversed.