Second National Bank v. Averell

Mr. Justice Shepard

delivered the opinion of the Court:

1. The first error assigned is based upon the refusal of the court to' permit the defendant to prove by its cashier, who had been examined as a witness by plaintiff, that if the plaintiff had brought the post-dated check to the bank on the 16th or 17th, and presented it during business hours, it would not have been received as a deposit from him as a depositor and an account opened. There is no doubt that a bank has the right to reject or accept a depositor at will. Morse on Banks and Banking, Sec. 178.

But this right was not in issue. The question to be determined by the jury was this: Did the defendant receive this check after business hours, for collection, out of any funds the drawer might have in his possession when it should become payable, and promise to hold the money when collected, to the plaintiff’s credit and subject to his check? In. other words, did the paying teller, Drinkard, receive the check from plaintiff for the purposes aforesaid; and did the cashier, with knowledge thereof, ratify or acquiesce in this action? The question was, what had been done under certain circumstances; not what might have been done under others. The evidence was not relevant, and the court was right in excluding it.

2. The doctrine is unquestioned, that where a corporation is engaged in a business requiring the services of several agents, whose powers are limited and whose duties are separate and distinct, and a party knowingly deals with one of *481them in a matter beyond his authority, he cannot hold the principal bound by the agent’s act unless the same shall have been ratified. Had the plaintiff met Drinkard away from the bank and entrusted the check to him, relying upon him to collect it and deposit the proceeds to his credit, clearly the bank would not have been bound by Drinkard’s action, without some act of ratification. Under such circumstances Drinkard would be his own agent and not the bank’s. Manhattan Co. v. Lydig, 4 Johns., 377. The facts in this case, however, show that the check was delivered to the teller at the bank where he and all the officers of the bank were engaged in attention to their duties. He was the paying teller, it is true, but he had occasionally acted as receiving teller within the knowledge of the cashier and without any objection from him. By acquiescence of the principal in the exercise of authority beyond his agency the powers of a limited agent may sometimes become greatly extended. Merchants Bank v. State Bank, 10 Wall., 604. If the facts in this record had all been before the general term on the last appeal before this, it is not probable that the court in its opinion would have gone so far as it did in the limitation given to Drinkard’s agency. That opinion, too, was based almost wholly upon the case of Thatcher v. Bank, 5 Sandf., 121, a decision by the Supreme Court of New York, the authority of which has since been overturned by the Court of Appeals in the well-considered case of East River Nat. Bank v. Gove, 57 N. Y., 597.

In that case the bank sued Gove to recover $1,100 that had been paid him by mistake. By some error he had been credited with that sum in excess of his deposits and had drawn it. When the mistake was discovered he was asked to return the money. Failing to do so for some days, the paying teller wrote him a note asking him to call and pay the amount due. Gove knew that there was both a paying and a receiving teller in the bank. He came to the bank and paid the money' to the paying teller, who failed to report it. It does not appear where the receiving teller was at the *482tíme. The proof showed that the paying teller sometimes, in the absence of the receiving teller, had received money paid to or deposited in the bank. The bank was held bound by the- receipt of the money by the teller. The court said: “Banks must be held responsible for the conduct of their officers within the scope of their apparent authority. When one goes into a bank and finds behind the counter one of its officers employed in the business, and upon his demand pays a debt due the bank, in good faith, without any knowledge that the officer’s authority is so limited that he has no right to receive it, he must be protected and the bank must be bound by the payment.” See also Munn v. Burch, 25 Ill., 21.

The principle governing the New York case seems to us to be both reasonable and just, and the facts of this case, as we find them in the record before us, are clearly within it. Averell was not a customer of the defendant. He was. slightly acquainted with Drinkard, but knew no one else connected with the bank. He called after the doors were closed for the day, as others frequently did for the transaction of business, and was admitted and shown into the anteroom. This room was next the main office where the officers and clerks were still at work, and persons therein could see through the wire partition. Drinkard went to meet the plaintiff, ascertained his business and took the two checks which he presented. He went back to the main office, procured the money and paid the check which bore date that day. He retained the post-dated check, promising to pay it when due and enter it to plaintiff’s credit as á deposit. As is usual in the case of receiving a deposit/ he brought out the “signature book” and had plaintiff to write his signature so that the genuineness of his checks might be established by comparison in case of need. These transactions were had, it may be said, in the very presence of the cashier, or more nearly so than similar transactions during the ordinary business opening of the bank.

Though not charged with the particular duty of receiving *483such checks for collection and deposit, Drinkard had nevertheless occasionally performed the duties of the receiving teller within the knowledge of the cashier and without his objection. It is not shown as a fact that the plaintiff intended to make Drinkard his own agent; nor does it appear that he was aware of any limitation upon his authority in that regard.

The cashier testified that he saw the check on Drinkard’s desk on the same afternoon and knew that he had received it from plaintiff; that he did not think it belonged to Drinkard, but inferred it was there to be paid. He made no further inquiry and said nothing with respect to Drinkard’s exercise of authority beyond the scope of his employment.

The trial justice, following the decision on the last appeal, charged the jury that in the transaction Drinkard was the agent of plaintiff and not of defendant. But he further instructed them substantially to the effect that if the cashier knew of the transaction immediately after it occurred and assented thereto, the defendant would be liable for the amount of the check and protest fees if, on the 19th, the drawer had sufficient funds in the bank to meet it. We find no error in the charge with which the case was given to the jury, either in the instructions given on behalf of plaintiff or in the qualification attached to defendant’s special instruction. Had the court instructed the jury to find as a fact from all the evidence, whether or not in the transaction itself, Drinkard was acting as the agent of the defendant, we would not hold it to be error. The effect of the charge as given was substantially the same as that, but the form in which it was put made it more favorable to the defendant.

3. When the bank opened on the 19th the drawer had funds therein more than enough to discharge the check. This was sufficient to make the bank liable, and it made no •difference that at the closing hour the account of the drawer had'been overdrawn. The money must be considered as if in fact collected and placed to the credit of plaintiff, and the failure to recognize his right to it gave him his right of ac*484tion as for money had and received. Kilsby v. Williams, 5 Barn. & Ald., 815; S. C. 7 Eng. Com. Law Rep., 443; Oddie v. The Bank, 45 N. Y., 735; Bank v. Burns, 68 Ala., 275; Tinkham v. Heyworth, 31 Ill., 519. It was well said in Kilsby v. Williams, that: “When they received the check from him they became his agents to receive the money upon it as soon as possible, and if they could be allowed to appropriate the money received by them to the payment of subsequent checks, it would be doing great injustice and injury to their own customers.” In National Bank v. Burkhardt, 100 U. S., 686, it was held, that if at the time a check is handed into the bank, the holder demands to have it placed to his credit, the bank may refuse to do so. But if it retains the check it is bound to the depositor; and no usage or custom that checks shall be held and only credited at the close of the day’s business, provided there are then funds on hand to meet it, will be suffered to prevail against it. It was also said that in such a case the ordinary rule that a day is an indivisible unit will be disregarded, and the actual priority of the transaction permitted to be shown.

No error having been found in the proceedings below, the judgment must be affirmed, with costs to the appellee; and it is so ordered.