(dissenting in part). While I fully agree with the careful opinion of the majority of the court as to the defendants other than the administrator of Edwin Dresser, I am unable to agree with a finding that by reason of special negligence on the part of Edwin Dresser his estate should be held responsible in damages to to full amount of Coleman’s defalcations from December 1, 1908, to the close of the bank.
I am especially of the opinion that what may be termed the “Fillmore warning” has been given undue and artificial importance as a notice putting Edwin Dresser on guard against Coleman as an untrustworthy person, whose conduct should have been brought to the attention of the other directors and made a subject of investigation.
The special master, experienced in judicial work, had before him the witnesses in person, and upon this matter, depending so much upon oral testimony and upon the circumstances under which Fillmore’s statement was made, found no negligence. I am of the opinion that this finding of the master should stand.
*546The testimony of Mr. Wellington Fillmore, who was a depositor in the bank up to the time that it closed its doors, is chiefly relied upon as a direct warning to Dresser. The following extracts from Fillmore’s testimony are referred to. They relate to a brief conversation with Dresser on the street :
“I told him that it was very evident there was a thief in the bank; that the money had been stolen. I said, ‘I would advise you to look after Coleman, for I believe that he is living a pretty fast pace, and X have pretty good authority for believing that he is supporting a woman.’ That is about what I said to him.”
Upon cross-examination he testified;
“X-Q. 3. Give the whole of that conversation again. A. I said to him it'was very evident there was a thief at the bank; that X was satisfied that my package had been stolen, and advised him to make inquiries about Coleman; that I believed he was living a pretty fast pace, and I was informed by pretty good authority that he was supporting a woman.
“X-Q. 4 Is that the whole of it? A. Well, I told him who my authority was; I told him who had told me what Coleman was doing.
“X-Q. 5. How long was the conversation? A. About three minutes.
“X-Q. 6. He was waiting to take the car, was he? A. Tes, sir.
“X-Q. 7. He made no reply ? ■ A. No; he made no reply. It might have been a five minutes’ talk.”
■ From this testimony it appears that the charge that there was a thief in the bank related to the disappearance of a special package containing $150, which Fillmore had left with Davis,' a former cashier, for safe-keeping some 15-years before, and which could not be found. It had no relation to any business of the bank, or to any matter of accounts or of bookkeeping, or to the disappearance of any funds of the bank.
There is no evidence that Coleman had anything to do with the disappearance of this box, and he denied that he did, though testifying freely as to his. defalcations. There appears no sufficient ground for Dresser’s accepting Fillmore’s conclusion that the box had in fact been stolen, and that for this reason there was, at the time of this conversation, “a thief in the bank,” or that Coleman was a just object of suspicion on that account. ' '
There is, however, evidence in the .record of doubt in Dresser’s mind as to the facts. Fillmore testified that Dresser, in a previous conversation, had asked him if Fillmore had a receipt for the box, that he replied that he had not, and that Dresser wanted to know why he did not put it'in the savings bank. There is no evidence that Dresser had any personal knowledge of the existence of the box; and Earl, the cashier, .testified that he did not remember seeing a box' that answered the description of the one that Fillmore testified to as being lost.
The expression, there is “a thief in the bank,” made in this connection, contained no suggestion or implication of Fillmore’s knowledge of tire abstraction of any funds of the bank. It suggested suspicion of Coleman, based upon disappearance of the package. How far Fillmore’s grounds of suspicion of a theft were the basis of the advice to look after Coleman, and what weight Dresser should have *547attached to Fillmore’s suspicion of theft and of Coleman as a thief, were questions peculiarly for a master who heard the oral testimony, as was also the question of what weight Dresser should have attached to the accompanying statement of Fillmore’s belief that “he is living a pretty fast pace,” and of his “pretty good authority that he is supporting a woman.”
This brief street conversation, which is now given such grave importance, was preceded by a formal letter from Fillmore to Dresser, as president, dated September 29, 1908, and relating to the loss of the package; a matter which was not new at the bank, but which previously had been under discussion with Dresser, with Earl, the cashier, and the subject of correspondence with Davis, the former cashier, with whom the package had been left many years before.
Though in his letter Fillmore says that the package was once handed to him, “I think, by Mr. Earl,” Earl testified that he did not remember seeing a box that answered the description of the one Fillmore testified to as being lost. Whether the box had ever been in Earl’s possession, or had disappeared during the time of Coleman’s employment at the bank, rather than during a previous period of eight years, is a matter of dispute upon the briefs.
But, whatever the fact, there was at least substantial reason for doubt in Dresser’s mind as to the justice of Fillmore’s grounds for suspicion of Coleman, and as to their weight.
The letter concludes as follows:
“WMle tho National City Bank may not be legally bound to make this loss good, at the samo time I consider it under moral obligation to reimburse me for this loss. As I never had it in my hands but at the times above-mon-tionod, and never removed* it from the bank, I can come to but one conclusion: That it has been destroyed or removed by some one connected with the bank. I hope you will bring this matter before the board of directors of your bank, and inform me of the result at as early a date as convenient.”
In this formal communication Fillmore makes no charge of theft, and no allusion to Coleman, and suggests no suspicion of him." The matter which he desires to be brought before the board of directors, and to be informed of the result, is a request for reimbursement of ?1'S0.
Fillmore received no reply to this request, and had no further conversation with Dresser, except the short street conversation above set forth.
That there was neglect by Dresser of the bank’s interest in not submitting this request for reimbursement to the board of directors does not appear. If the letter could be regarded as notice of a loss of a package, this might have led to a further inquiry as to that loss. Such inquiry, so far as appears, would have amounted to nothing, and would not have affected Coleman; certainly there was no reason for examining the books of the bank in this connection.
Nor does the street conversation gain any weight when coupled with this letter. On the contrary, when preparing a formal communication for the consideration of the board, of directors, Fillmore makes no charge or implication of theft by any one, and, though a de-*548p'ositor, gives the president for communication- to the board of directors .no hint of his suspicion of Coleman or his mode of life, and suggests no inquiry.
After the lapse of about a month without a response to his request, and’ upon a casual meeting on the street, in a very brief conversation he first suggests his- suspicions of Coleman. At no time, either by his letter or orally, did he suggest bringing before the board the question of an inquiry into Coleman’s conduct.
That Fillmore’s suspicions were of serious weight, even with himself, se'ems doubtful from the fact that he did not withdraw his deposit, but, like Dresser, remained a depositor in the bank until it closed.
To take the statement, “there is a thief in the bank,” away from its connection with the unexplained disappearance of Fillmore’s package of $150 at some indefinite date, a matter having no connection with the business and books of the bank, and to convert it into- a warning connected with a great loss of $300,000, more or less, through an unprecedented manipulation of the credits and books of the bank, seems unjustifiable. An inquiry into this matter, which already had been inquired into, would not naturally have led to an investigation of Coleman’s bookkeeping.
Should Fillmore’s statement, not of facts, but of suspicions, have led to an investigation of Coleman’s life out of the bank?
It should not be left out of account that Coleman was daily at the bank, where he was under observation of Dresser, and especially of Earl, the cashier. He was well behaved, industrious, and courteous, and was well liked. There was no evidence that he was criticized by any one in the bank because of anything in his conduct or bearing. He was known to be.the son of a reputable father, who was in business in Cambridge, and a man of some financial standing.
How far Dresser’s own knowledge of Coleman, and his judgment from personal observation of Coleman, justified him in attaching no weight to Fillmore’s suspicions, is especially a question of fact upon which thé master, who had Coleman under close observation as a witness, as he did also the other witnesses who testified as to Coleman’s conduct, was much better qualified than judges who have only a printed record. That Dresser had complete confidence in Coleman is manifest. That this confidence was not in fact disturbed by Fillmore’s statement is manifest. Should it have been ? Our own knowledge of men constantly leads us to discredit and instantly reject rumors and suspicions concerning them. There is no rule of law that determines when it is reasonable and when it is unreasonable to do so. The master has found in favor of Edwin Dresser upon this point.
The practical rules which determine the weight to be attached to a master’s report are especially applicable on just such a question as this, and for sound reasons weigh heavily in favor of this defendant.
It was not unnatural that Dresser should have regarded the advice to look after Coleman as based principally upon the disappearance of the box. The record does'not contain an explanation by Dresser *549of his reasons for attaching no weight to Fillmore’s statement of his suspicions. At the time of Dresser’s examination he testified that he was born December 16, 1826, was 87 years old, and during the last 2% years preceding his testimony had been sick most of the time, and that he had not the slightest recollection of Fillmore’s telling him that there was a thief in the bank, or of sending him a letter. As the master found Fillmore a credible witness, the lack of explanation by Dresser was presumably due to a natural failure of memory during the period following, the closing of the bank. But the fact that Dresser was the largest depositor in the bank, and that the bank’s interests and his own were to so great an extent identical, as well as the testimony as to his regular business habits, seem inconsistent with a reckless disregard of notice of any actual fact brought to his attention affecting the trustworthiness of the employés of the bank.
If Dresser erred in considering all that Fillmore said as a mere incident to his claim for reimbursement for the loss of the package, and should have made inquiry into the statement as to Coleman’s supporting a woman, the inquiry would probably have led then, as it did later, to the explanation that the woman was engaged to Coleman, that she had occasionally called at the bank, and that she was a "ladylike and well-appearing young woman.”
Another and distinct “warning” is found in Coleman’s ownership of an automobile — “A clerk at $12 a week with an automobile!” Dike the expression, “There’s a thief in the bank,” this is given a false value, if dissociated from the rest of the facts.
The master had before him evidence that Coleman, after bank hours, was engaged in the- automobile business, had sold a number of automobiles, one to a director of the bank; that the young man, though working at a small salary, lived at home with his father, who was reputed to be of good financial standing, and the testimony of a witness who said that Coleman’s father was reputed wealthy and that it did not surprise him to see the son have an automobile; also testimony that the price of the automobile — $800—was paid for in part by commissions on sales of other machines, and that Coleman made no concealment of the machine, but invited persons connected with the bank, including Dresser, to ride with him.
There is also meager evidence that Coleman had discussed copper stocks with Dresser.'1 The master specifically found that Dresser had no knowledge that Coleman was speculating in stocks, and it is evident that a contrary finding, or a finding that Dresser had reasonable cause to suspect Coleman of stock gambling, could not justly be based upon the very meager evidence on this point.
It seems erroneous to assume that all of these so-called warnings, or grounds for suspicion, were ever assembled in Edwin Dresser’s mind in the form in which they are assembled in the appellee’s brief.
( We should also take into full account the fact that the. cashier, Earl, as executive officer of the bank (Merchants’ Bank v. State Bank, 10 Wall. 604, 650, 19 L. Ed. 1008), had full opportunity to observe Coleman, and that Dresser was reasonably entitled to rely greatly *550upon Earl’s observation of Coleman, and upon his discovery of any apparent irregularities in his conduct.
We are not informed that any of the bank’s money was spent upon Coleman’s automobile, or upon a woman whom he was supporting, or to what extent, if at all, it was spent in stock gambling.
■ Upon the theory that the principal negligence was the failure of the directors to make such examinations of the books as were required of them, this might'perhaps have been regarded as a subordinate matter. But upon the reversal of the District Court on this point the question how far the loss of the bank’s money was in fact due to matters of which Dresser had notice enough to put him on inquiry seems of special importance.
If it be conceded that the proofs are sufficient to show that Edwin Dresser was negligent-in failing to heed warnings of Coleman’s un-trustworthiness, and if we apply the rule that notice sufficient to put one' on inquiry is notice of everything to which inquiry might have led, this, in my opinion, should lead not to the affirmance of the judgment against Dresser for the full amount of Coleman’s defalcations, but rather to sending the case back to the District Court for a reassessment of damages.
The plaintiff’s evidence fails to show to what extent Coleman’s appropriation of the bank’s funds was due to any of the matters of which it is claimed Dresser had notice.
It must be borne in mind that this is not an action of tort. In view of the decision of the District Court that the action against Dresser’s administrator survives because the cause of action is ex contractu rather than ex. delicto (229 Fed. 798), there is special force in the defendant’s argument that the liability' is only for such loss as was the natural and probable consequence of negligence, and which ought to have been foreseen in the light of attending circumstances. Negligence is a failure to take reasonable precautions against that which is reasonably to be. apprehended.
This case presents the remarkable feature that there was no reasonable cause for apprehension that a bank could be reduced to a mere shell by the unprecedented method adopted by Coleman. It is also remarkable, in that the causes which led to such large misappropriations by Coleman were in a great part equally outside the bounds of reásonable anticipation.' That this large loss of The bank was due to any causes operating upon Coleman which, upon the most favorable view of the plaintiff’s evidence, should have been investigated is not proved in this récord, which, though it sets forth slight evidence concerning the purchase of stocks, extravagances in mode of life, etc., is yet very meager as to the causes which led Coleman to his large defalcations.
In considering, however, the question whether the present judgment should be affirmed, or whether the case should be sent back for further proceedings to determine the damages, we cannot indulge in any presumption that the matters in respect to which negligence is charged were the causes which led him to ruin the bank. We cannot disregard the fact that, from our own records and from the reported decision of *551this court, there appears explanation as to the disposition by Coleman of the bank’s funds, and as to the causes which led him to such disposition, which destroys any presumption that the bank’s losses were wholly due to matters in respect to which the defendant Dresser was negligent, and shows that they were due principally to an unprecedented combination of circumstances in which third parties intervened with a scheme for making Coleman a conduit for conveying to them the bank’s funds, and for despoiling Coleman as well as the bank — a scheme of third parties in which Coleman was but the cat’s-paw.
If Coleman had associated himself with a band of burglars, and admitted them to blow the safe locked against him, it would seem quite clear that this would be so remote a cause of loss that the defendant Dresser could not be responsible for it by reason of the evidence in this case.
We cannot ignore the fact that upon the records of this court is something quite analogous to such a case, and it is not improper, in the interests of justice, to take judicial cognizance of facts appearing upon our own records and of great notoriety in this community, although, of course, we give weight to these only upon the question of affirmance or retrial of the question of damages. In Keliher v. United States, 193 Fed. 8, 12, 114 C. C. A. 128, appears the following;
“Therefore the United States, proved by Coleman, apparently without objection, that he misapplied approximately §211,000 on anid after the 2d day of .Tune, 1909, and that of this amount all but a sum not exceeding in the whole $50,000 was lost through his connection with the plaintiff in error”— i. e., Keliher.
In Spade v. Lynn & Boston Rd., 168 Mass. 285, 47 N. E. 88, 38 L. R. A. 512, 60 Am. St. Rep. 393, it is said:
“Rules of law respecting the recovery of damages are framed with reference to the just rights of both parties; not merely what it might be right for an injured person to receive, to afford just compensation for his injury, but also what it is just to compel the other party to pay.”
A court of equity called upon to measure a just compensation for breach of a contractual duty is not required to apply the rule of damages applicable in cases of wanton or willful wrong. The damage to be recovered should be the natural and proximate consequence of the act complained of, and those results considered proximate which the wrongdoer from his position must have contemplated as the probable consequence of his breach of contract. Smith v. Bolles, 132 U. S. 125, 130, 10 Sup. Ct. 39, 33 L. Ed. 279; Globe Refining Co. v. Landa Cotton Oil Co., 190 U. S. 540, 23 Sup. Ct. 754, 47 L. Ed. 1171; Pollock on The Law of Torts (10th Eng. Ed.) pp. 582, 583; Id. p. 41; Milwaukee & St. Paul R. R. Co. v. Kellogg, 94 U. S. 467, 475, 24 L. Ed. 256; Atchison, etc., Ry. Co. v. Calhoun, 213 U. S. 1, 7, 29 Sup. Ct. 321, 53 L. Ed. 671.
That Coleman, a bookkeeper constantly under the supervision of a cashier, and whose fidelity bond was fixed at the sum of $5,000, as a reasonable measure of the risks incident to his position, would have either the opportunity or the temptation to do what the appellee’s brief characterizes as “the seemingly impossible,” was far outside *552the bounds of reasonable foresight. I know of no authority which visits upon one who has failed in the performance of a contractual duty damages beyond the limits of what reasonably ought to have been foreseen, or which condemns him in damages to the extent of what is “seemingly impossible.”
I feel constrained to dissent on the grounds:
First. That the master’s report should be adopted, and should not be set aside.
Second. That, assuming negligence as found by the majority, the amount of damages is not justified by the evidence.
On Motion to Amend Decree.
ABDRICH, District Judge.The motion to amend the decree of this court of March 5, 1918, by adding the words “interest on the said amount to run from February 1, 1916, the date of the final decree in said District Court,” is denied.
[11, 12] Rule 30 of this court (150 Fed. xxxv, 79 C. C. A. xxxv) and rule 23 of the Supreme Court (32 Sup. Ct. xi) are the' same as to interest upon judgments below in actions at law. These rules, however, in their ordinary sense, are understood to apply to judgments which- are affirmed in toto, and not necessarily to judgments which are modified in substantial respects. ' •
In equity the rule likewise applies, in terms, only to decrees which are affirmed, and not to substantially modified decrees. But, recognizing the idea of the existence of inherent discretion, the general rule in equity that interest shall be .calculated upon decrees which are affirmed is subject to the important qualification that it may be otherwise ordered. It being thus assumed, by such express qualification, that reasons may exist which would make it inequitable to allow interest, even where the decree is in all respects affirmed, it may safely be assumed, we think, that more and stronger reasons may be found for doing the same thing, where the decree below is not affirmed in full, or in fact, but subjected to substantial modifications under a decretal order which directs -how the modifications shall be made, and which, by its terms, becomes operative as an affirmance only upon the modified creation. Under such circumstances, the plaintiff’s right to recover is not established by the original decree, but by a modified one, upon which the affirmance operates when the modification is made as directed.
It is probably quite correct to say, especially in equity cases, that it is reasonably within the realm of discretion — in cases where the recovery relates to unliquidated damages and to situations where recovery is not for money misappropriated and used by the defendant, but where he is sought to be charged upon the ground of negligence or the wrongdoing of another, and where the appeal is not for delay, but prosecuted in good faith upon substantial and close lines of controversy in respect to liability — for the court to say, if it finds equitable grounds for saying it, that interest ought to follow, or that it ought not to follow, and this without regard to whether the decree is affirmed in whole or in part. Steel Co. v. New York City *553R. R. 198 Fed. 778, 779, 780, 117 C. C. A. 560; Tire Co. v. Rubber Co. (D. C.) 232 Fed. 508; De La Rama v. De La Rama, 241 U. S. 154, 159, 36 Sup. Ct, 518, 60 L. Ed. 932, Ann. Cas. 1917C, 411.
The decision here did not hold Edwin Dresser for the amount decreed below, nor did it hold him upon the ground that he was negligent and liable in respect to the whole period covered by the District Court. The directed decree and the modified recovery are based upon only a part of the time covered by the findings and the decree of the District Court. Consequently, in quite a substantial sense the directed decree will become an original one, and the plaintiff’s right of recovery is thus to be established by a decree which is to be made in accordance with the mandate of this court based upon different facts and different findings than those involved in the first decree of the District Court.
The District Court says nothing about interest. Neither does the decree of this court.
The reason for not allowing interest in equity, and under such circumstances, resides largely in the fact that the damages are unliquidat-ed and must, in a sense, remain so1 until liquidated under the directions of the mandate; and it is because of this that the liquidated sum, as finally ascertained, is often adopted as the amount for which the right of recovery should be established through the instrumentality of the directed decree. The view that damages, as finally ascertained and decreed, often become the amount of -recovery, and that interest, something in the nature of damages, remains in abeyance until the right is established by the decree, in accordance with the mandate is accepted by the Supreme Court as so far conclusive that it is said that, where the decree of the appellate court does not expressly carry interest, none can be awarded by the court to which the decree is directed. Himely v. Rose, 5 Cranch, 313, 316, 3 L. Ed. 111; Boyce v. Grundy, 9 Pet. 275, 289, 290, 9 L. Ed. 127; In re Railroad Co., 140 U. S. 91, 96, 11 Sup. Ct. 673. 35 L. Ed. 339.
There would seem to be no principle upon which to ground interest upon unliquidated damages, or upon judgments and decrees for unliquidated damages, until they are determinate in every substantial sense.
Interest upon judgments and decrees which are affirmed is upon the idea that they were fixed and distinct muniments of right which the appellate court approves, as something which should stand, not only in substance, but in terms. Where a decree is modified or reconstructed upon different lines, the right was not defined and established by an original judgment or decree, but is defined and established by another,- a later, and a different muniment; consequently the reason for interest upon affirmed judgments and decrees does not exist in the latter circumstances. Doubtless the directed decree might be so closely like the original one as to justify an order for interest upon equitable grounds, but it would not come under any rule of strict right.
■ Where the right of interest is not established by contract, by statute, or by judgment, it ordinarily comes as an allowance in the nature *554of damages, based upon use or wrongful detention. Pike v. Gregory, 118 Fed. 128, 129, 55 C. C. A. 78; United States v. North Carolina, 136 U. S. 211, 216, 10 Sup. Ct. 920, 34 L. Ed. 336. .
On the whole, and under the circumstances of this case, we incline to the view that there are no sufficient equitable reasons for allowing interest upon the unliquidated damages which resulted from losses, the amount of which is to be hereafter ascertained, in order that the measure of the plaintiff’s right of recovery may be known and established by a modified decree to be hereafter formulated by the District Court.
Where damages are unliquidated, there is usually no interest until the right to the principal is established or, in other words, until judgment or decree. It is understood that when the District Court has made the ascertainments directed by the decree of this court of March 5, 1918, and entered a decree thereon, that the decree of March 5 will then operate in áffinnance thereof and as of the date of its entry. It is not, however, in fact, an affirmance of the old decree, bet of the reconstructed one. It was not intended in any other sense. It is one of those, not unusual, cases where certain things are directed to be done, and when done, the decree of affirmance, though earlier, is made to operate upon the perfected condition, without" again coming to the appellate court.
Judge BROWN, having dissented on the main question of liability, takes no part in the decision of this question.