Ihl v. Bank of Saint Joseph

I.

Hale, J.

Fronr the evidence in this case, the jury were at liberty to infer any one of the following states of facts in reference to the deposit of the drafts by the plaintiff, in the defendant bank: (1) That the plaintiff deposited the drafts with Frenger, as receiving teller of the bank, with instructions for the bank to collect the same and credit the proceeds to his, plaintiff’ si account. (2) That the plaintiff thus deposited the drafts, with the instructions that the drafts be collected and the proceeds credited to the account of Frenger, as trustee. (3) That the plaintiff thus deposited the drafts, with instructions that'the drafts be collected and the proceeds be credited to the account of Frenger, not as trustee, but simply as Frenger.

Under the first mentioned state of facts, the liability of the bank is clear, and is not disputed by the defendant. But, under the instructions of the court, the jury found against the existence of such a state of facts, and we need not notice further that particular phase of the case.

The deposit of the drafts by the plaintiff with the bank for collection, and the collection thereof by the bank, made the bank the plaintiff ’ s debtor to the amount of the drafts thus collected. The-plaintiff had the right to appropriate, by directions and instructions to that effect, the proceeds of the drafts to any account, and, therefore, the bank would have been relieved of any liability to the plaintiff, on account of the collection of the *140drafts, by crediting the proceeds of the drafts in the manner directed by the plaintiff. It is conceded that the bank credited the proceeds of the drafts to the account of Frenger, as simply Frenger, that is, to Fren-ger’s individual account. If the fact was, as set__out in the third- state of facts above, that the plaintiff directed this to be done, there was no liability on the part of the defendant, unless it was bound in law, under the facts of this case, to not only credit the proceeds of the drafts when collected, in the manner directed by plaintiff, but also to see to the proper appropriation of the proceeds of the drafts by the person to whose account they were thus credited.

We do not understand that any such obligation was imposed upon the bank by the law, under the facts of this case. Frenger was the bank’s teller, and knew of the terms on which, and the objects for which, the deposit was made. But, in so far as concerns the carrying out of the terms of the trust or agreement between him and the plaintiff, he was acting solely for the parties to the agreement, and not at all within the scope of his agency or official duty as an officer of the bank. His knowledge was not the knowledge of the bank, either as to the terms of the trust agreement, or as to his intention in drawing the money out of the bank. Morse on Banks and Banking, 125, 133, and cases cited. Besides, if the bank properly credited the proceeds of the drafts to the individual account of Frenger, Frenger had the right, as against the bank, to draw the money out of the bank for the purpose of misappropriating it, although the bank knew of such purpose. This is true, because “ the banker is not justified in refusing to honor the depositor’s check, because he knows or believes that the check is an appropriation of funds to a person, or for a purpose, to whom, or for which, the depositor is not lawfully authorized to appropriate those funds. For, if the banker should look into this matter, he would make himself, improperly, a party to an inquiry between his customer *141and a tMrd party.” Morse on Banks, etc., 87. The author in that connection, however’ adds : “ But if the depositor seeks to pay his own debt to the banker by the appropriation of funds to his credit in a fiduciary capacity with the banker, then the banker is affected with knowledge of the unlawful character of the appropriation, and would be compelled to refund.” It is by force of this distinction, and the fact that, in this case, the defendant was in no wise benefited by the misappropriation of the money made by Frenger, that the authorities cited by the plaintiff ’ s counsel on this point have no application.

Although the bank could have relieved itself of any liability on account of the collection of the drafts by crediting the proceeds to any particular account, in accordance with the plaintiff’s instructions, it is, of course, clear that the bank would have been still indebted to the plaintiff in the amount collected on the drafts, if it credited such amount to an account other than the one to which plaintiff directed it to make such credit. If the plaintiff had directed the bank to credit the proceeds of the drafts to the account of A, and the bank had credited the proceeds -of the drafts to the account of B, the, bank would not have been thereby relieved of liability. The bank would have still owed to plaintiff the amount collected.

The difference between the individual account of Frenger and the account of Frenger, as trustee, is quite as great as the difference between the account of A, and the account of B. On checks signed by Frenger, individually, the bank would have had no authority to pay money credited to the account of Frenger, as trustee. Morse on Banks, etc., 293.

Hence, since it is conceded that the bank credited the proceeds of the drafts to the individual account of Frenger, we hold that it was error in the court to tell the jury, in the first instruction given for defendant, that, if the plaintiff deposited, in the bank, the drafts or their *142proceeds to the credit of Frenger, as trustee, and that, afterwards, Frenger drew said proceeds out of the bank, they should find for the defendant.

We have thus far considered this case as if the plaintiff had given the drafts to Frenger, as receiving •teller of the bank. We have done so, for the reason that it matters not whether the plaintiff gave the drafts to Frenger as such teller, or to Frenger in his individual capacity. Frenger received the drafts to be collected by the bank ; the drafts were delivered to the bank for .collection and were collected by it; the drafts were made by the plaintiff payable to the order of the bank ; the bank had to know what disposition to make of the proceeds of the drafts when collected; the receiving teller of the bank was the officer authorized to receive the drafts for collection, and to learn what disposition to make of their proceeds; and, hence, whether the drafts were given to him as teller or not, when the bank received the drafts through him for collection he acted for the bank, and the knowledge had by him as to the ■proper disposition to make of the proceeds of the drafts was the bank’s knowledge, because it pertained to a matter within the scope of his official duty, and as to which he acted officially.

Therefore, it being conceded that the proceeds of the drafts had been credited to the individual account of Frenger, and that Frenger had drawn the money out of the bank, and there being no evidence tending to show that the bank had received any of the money, or had been in any manner benefited by Frenger’s misappropriation of the trust money, the question was, did the plaintiff direct that the proceeds of the drafts be credited simply to the account of Frenger % If the plaintiff gave such direction, under the facts of this case, the bank was not liable. But, if, on the contrary, the plaintiff .directed that the proceeds of the drafts be credited to Ms own account, or to the account of Frenger, as trustee, the bank, under the facts of this case, was liable.

*143On another trial this issue of fact should be plainly and clearly submitted to the jury, disembarrassed of •extraneous matters tending to confuse them. The second instruction which was given for the defendant should not, for this reason, be given again.

II.

• ' The deposition of a witness present in court cannot be read as original evidence. ..It is true that the record states that Frenger, at the conclusion of his testimony, was discharged from custody under the attachment which had been served upon him, but it does not •appear that he had been released from attendance upon the court as a witness. The trial was still in progress, he had been examined as a witness, he was still constructively in attendance as a witness, the objection was made that he was present; we think that if he was not, in fact, present the party offering the deposition in evidence should have made that fact appear.

The presumption, to be drawn from the action of the •court in overruling the objection, is, not that the witness was not present, but is, that the objection, being true in fact, was unavailing in law. Besides, by having examined Frenger as a witness, the defendant lost the right to read his deposition in evidence.

The statute, in relation to depositions, contemplates the absence of the witness; it does not authorize the examination of the witness and the reading of his •deposition to supplement and substantiate the testimony elicted on his examination.

The plaintiff, by consenting that the deposition might go to the jury room, did not waive his objection .to the introduction of it in evidence.'

Judgment reversed and cause remanded.

All concur. '