So far as the evidence is conflicting, we find no such preponderance in favor of the defendant as would justify a reversal of the judgment on that ground. The question then is, whether, on the case made by the plaintiff, the verdict should be permitted to stand. In considering this question, it must be assumed that the money represented by the certificate of deposit belonged to the plaintiff; that such fact was known to the bank, and that the conversion of the certificate and the appropriation of the money to his own use by Warrack was, at the time, as between the plaintiff and Warrack, unauthorized and wrongful.
In determining, however, whether the bank was justified in allowing Warrack to draw the money, and place it to the credit of his individual account, we must look to the apparent authority in relation thereto with which he was clothed by the plaintiff. It is a familiar rule that where the owner of property holds out another, or allows him to appear as the owner of, or as having full power of disposition over the property, and innocent parties are led into dealing with one having such apparent ownership or authority, they will be protected in doing so. McNeil v. The Tenth National Bank, 46 N. Y. 325; Anderson v. Armstead, 69 Ill. 452.
Although the money in question belonged to the plaintiff, and such ownership was known to the bank, still, he placed it in the possession of Warrack, and allowed him to take it to the bank and deposit it in his own name, and to receive therefor a certificate of deposit, payable to himself. It is true, the plaintiff’s testimony tends to show that when he permitted Warrack to take the money for the purpose of depositing it, he did not expect that it would be deposited in Warraclc’s name, although it does not appear that he gave any specific directions on that subject. But the possession of the money by War-rack, in the absence of notice of any limitation upon his authority over it, warranted the bank in receiving it on deposit, and in issuing therefor a certificate or other voucher in any form Warraclc might see fit to direct. Even if he had deposited it to the credit of his private account at that time, we think his possession of the money would have raised a sufficient implication of authority so to do. True, the officers of the bank knew it was the plaintiff’s money, but they also knew that he had entrusted it to Warrack in such manner as to vest him apparently with full power of disposition over it, and they had a right, in the absence of notice to the contrary, to assume such apparent authority to be his real authority.
But when Warrack presented the certificate of deposit at the bank for payment on the 3d of September, there existed the still further and equally conclusive ground for the inference that in taking the certificate payable to himself, he acted upon competent authority, viz: that the plaintiff had, up to that time, manifested no dissent from or disapproval of his act in taking it in that form. Where an agent departs from, or acts without or contrary to his instructions, the principal must dissent, and give notice within a reasonable time; and if he does not his assent and ratification will be presumed. Dunlap’s Paley on Agency, 31, and 171, note O. The certificate in this case was shown to the plaintiff as soon as Warrack returned to the office after making the deposit, yet no notice was given to the bank that it was in any respect unsatisfactory. It remained outstanding between three and four months, during all which time the plaintiff acquiesced in what his agent had done in his behalf. It will scarcely be contended that three months and a half was not much more than a reasonable time for the plaintiff to signify to the bank his dissent from the act of his agent, his place of business being during all that time, as the proof shows, directly across the street from the bank. By failing to object, he must be deemed to have ratified his agent’s acts, and he cannot now be heard to say, as against the bank, that the agent acted in violation of his instructions or in excess of his authority.
If the bank, then, had a right, under the circumstances, to presume authority in Warrack to take the certificate payable to himself, it had a right to pay the certificate on presentation, according to its terms. The validity of the contract evidenced by the certificate being established, the right of the bank to discharge itself from liability by paying the money to the party therein named as payee necessarily follows, unless at the time payment was made it was chargeable with notice of a claim on the part of the plaintiff that payment should be made to him, notwithstanding the terms of the certificate. Was it chargeable with such notice?
Such notice could not arise, from the mere fact that the money was the plaintiff’s. While that fact was known to the bank, it also knew that he had so far placed the money at the disposal of Warrack, as to authorize him to deposit it to his own credit. ¡Nor is there any evidence of notice to the bank of a revocation of Warrack’s authority over it. It is insisted, however, that the bank was put upon inquiry as to the plaintiff’s rights, by the indorsement on the certificate which had been erased and obliterated prior to its presentation for payment.
It is well settled that the payee of commercial paper, after having assigned such paper by indorsement, has a right, on its return to his hands, to strike out any indorsement he may have placed thereon, and thus re-invest himself with the legal title. The erasure of such indorsement, then, subjects the paper to no suspicion, and raises no presumption of any outstanding interest in any person who may have previously held it. If the maker is bound to take notice of the indorsement when the paper is presented for payment, he must also be presumed to know that the payee in whose hands he finds it, had, prima facie, aright to make the erasure. In the present case, if it be granted that the indorsement was notice to the bank that the certificate had at one time been assigned to the plaintiff, its erasure was explained by the fact that the paper had been retured to the hands of the payee, who had a right to erase it. The fact to be explained and a sufficient explanation wore both at hand, and the bank, therefore, was under no obligation to make further inquiries.
But even if it should be conceded that the bank was not warranted in paying the certificate by crediting the money to Warrack’s private account, we think the plaintiff has, by his subsequent conduct, concluded himself from insisting that such payment was wrongful. If the payment amounted to a tortious conversion of the certificate, or of the money due thereon, doubtless the plaintiff, had he chosen so to do, might have held the bank liable to him for the tort. But the money having thereby passed into the hands of Warrack, and having been appropriated by him to his own use, it was competent for the plaintiff, at his election, to waive the tort both on the part of the bank and of Warrack, and treat the money as a debt owing from Warrack to him. He was at liberty, with the concurrence of Warrack, to convert it into a loan, bearing a stipulated rate of interest, and give Warrack such time of "payment as he might think proper. But having made the election, he would be bound to abide by it. The moment the transaction became converted into a loan, the possession of the money by Warrack would be rightful, and the act of the bank in paying it to him could no longer be treated as a tort. The two positions would be inconsistent with each other, and the plaintiff having elected the one, would not be permitted to resort to the other.
The evidence seems to establish, beyond controversy, the fact that the money in question was, from the very day it was passed to Warrack’s credit at the hank, treated by the plaintiff and "Warrack as a loan. It is true, the plaintiff, on learning that Warrack had appropriated said money, entered a protest against his having done so; but the plaintiff’s objections seem to have been instantly silenced by a promise on the part of Warrack to pay him interest at the rate of nine per cent, per annum, and to secure the loan by mortgage on certain real estate. From that time, for over three years, Warrack retained the money under the arrangement thus made. In the statements of account rendered by the plaintiff, it was charged to Warrack in express terms as a loan, and interest thereon at the stipulated rate of nine per cent, per annum was computed and charged. In the same account the various payments made by Warrack were credited and applied to the extinguishment of the interest thus computed. The evidence fails to show that during this entire period the plaintiff uttered any further protests against the use of the money by Warrack, or said or did anything inconsistent with the position that Warrack held the money as a loan.
We are unable to perceive that the case is changed in the least, by the fact that Warrick failed to secure the loan by mortgage according to his promise, nor by the fact that the plaintiff was deceived as to his ability to give a first mortgage on the Washington Heights property. The transaction did not cease to he a loan, because of a failure of the borrower to give the stipulated security. It is possible the plaintiff might have rescinded the arrangement under which the transaction was to be treated as a loan, on account of the inability of Warrack to give the stipulated security, had he asserted his right to do so in apt time, hut we know of no principle upon which he could he allowed to do so after the lapse of between three and four years. But there is no pretense that, as between the plaintiff and Warrack, any such rescission was ever attempted. The last transaction between them disclosed by the record, consists of a statement of account based upon their contract, and in which interest at the rate agreed upon for the full period then elapsed was computed. Said statement was rendered January 22,1878, after the plaintiff had become fully apprised of the inability of Warrack to give the promised security. The statement, as well as the letter which accompanied it, constitutes a clear and unequivocal affirmance of the loan.
It appearing, then, clearly and unquestionably, that from the day the bank credited Warrack with the amount of the certificate of deposit up to as late as the 22d day of January, 1878, the money in question was held by Warrack as a loan from the plaintiff to him, we know of no principle of law upon which the bank can now be charged by the plaintiff with the conversion of the certificate. The bank is as effectually discharged as it would have been if the money had been paid directly to the plaintiff and by him loaned to Warrack.
We are unable to perceive any ground upon which the action of the plaintiff can he sustained, and the judgment will accordingly he reversed.
Judgment reversed.