First Nat. Bank of Nephi v. Foote

• Citation: 42 P. 205,12 Utah 157
• Decision Date: 06 November 1895
• Docket Number: 593
• Court: Supreme Court of Utah
• Parties: FIRST NATIONAL BANK OF NEPHI, A CORPORATION, RESPONDENT, v. CHARLES FOOTE, W. A. C. BRYAN, APPELLANTS, IMPLEADED WITH W. S. TINGEY AND ALMA HAGUE. [1]

42 P. 205

12 Utah 157

FIRST NATIONAL BANK OF NEPHI, A CORPORATION, RESPONDENT, v. CHARLES FOOTE, W. A. C. BRYAN, APPELLANTS, IMPLEADED WITH W. S. TINGEY AND ALMA HAGUE. ^[1]

No. 593

Supreme Court of Utah

November 6, 1895

APPEAL from the District Court of the First Judicial District. Hon H. W. Smith, Judge.

Action by the First National Bank of Nephi, a corporation, against Charles Foote and W. A. C. Bryan, appellants, impleaded with W. S. Tingey and Alma Hague. From a judgment for plaintiff defendants Foote and Bryan appeal.

Affirmed.

Messrs Sutherland & Murphy and Mr. Andrew Howat, for appellants.

The court below erred in directing the jury peremptorily to find a verdict in favor of the plaintiff for $ 3,000. 1. That sum includes $ 500 of interest computed at two per cent a month. R. S. U. S. §§ 5197, 5198; National Bank v Johnson, 104 U.S. 271. 2. There was very convincing evidence tending to show that there was no consideration to the notes. The supposed consideration is disclosed by Hague, plaintiff's cashier. He stated to appellants for what he desired them to sign the notes, and therefore no other can be inferred. It was merely the money the bank had paid for land deeded to Paxman. As these appellants were not concerned in that purchase, had not requested or been consulted about it, and were not benefited by it, that payment by the bank could not be a consideration for these notes. The bank has the land and there is not the slightest ground for it to ask to have anybody refund the money paid for it. 3. There was evidence for the jury to consider tending to show, and, being uncontradicted and credible, showing that the notes were not to be the notes until signed by Geo. C. Whitmore, and that he did not sign any one of them. This agreement was made by the plaintiff; the acts of the plaintiff's cashier were its acts. What one does by another, he does by himself. The plaintiff avails itself of this act of the cashier in obtaining these notes by bringing this action. Those acts are thus necessarily adopted in toto. Here was precedent authority, and subsequent adoption and ratification, necessarily including all the acts and representations and assurances which accompanied the procuring of the notes. Mechem on Agency, §§ 714, 715, 130, 148, 151; Packet Co. v. Clough, 20 Wall. 540; Vicksburg, etc., R. R. Co. v. O'Brien, 119 U.S. 119; Crane v. Hunter, 28 N.Y. 389; Laird v. Campbell, 100 Pa. St. 164; Caley v. Railroad Co., 80 Id. 363; Bennett v. Judson, 21 N.Y. 238; Aultman v. Olson, 34 Minn. 450; Wolf v. Pugh, 101 Ind. 305; McGraw v. Germania F. Ins. Co., 54 Mich. 165. A cashier is the chief executive officer through whom the whole financial operations of the bank are conducted. 2 Am. & Eng. Enc. L. 118; Merchants' Bank v. State Bank, 10 Wall. 604, 650. The admissions and declarations of the cashier in relation to matters within the scope of his ordinary duties bind the bank. 2 Am. & Eng. Enc. L. 120. Sturgis v. Bank of Circleville, 11 Ohio St. 153; Houghton v. First Nat. Bank, 26 Wis. 663. This suit is between the original parties to the note. Between such parties the consideration may be inquired into and all the facts attending the inception of the contract. 1 Dan. Neg. Inst. §§ 124, 769. On the evidence given the defendants were entitled to the judgment of the jury. By the statute the court was not authorized to give any charge at all as to the facts, much less to decide them. 2 C. L. § 3361. The appellants had a constitutional right to a trial before and verdict of a jury.

Messrs. Thurman & Wedgewood, also for appellants.

The rule against the admission of parol testimony to vary the terms of a written contract does not exclude evidence of an oral agreement which constitutes a condition upon which the performance of a written agreement is to depend. It is always admissible to show by parol that a document was conditioned on an event that never occurred. Michels v. Olmstead, 14 F. 219; Benton v. Martin, 52 N.Y. 574; Westman v. Krumweid, 15 N.W. R. 255 (Minn.); Faunce v. Assurance Co., 101 Mass. 279; Skaavaas v. Finnegan, 16 N.W. R. 456 (Minn.); Daniels on Neg. Inst. vol. 1, § 68 (4th ed.). The evidence was relevant and should have been admitted. It needs a delivery to make the obligation of the note operative at all, and the delivery and the extent of the operation of the instrument may be limited by the conditions with which the delivery was made. The testimony offered as above stated by the defendants would have proved that there was a condition precedent to be performed before there was any delivery of the note. A note delivered before the performance of a condition precedent is void in the hands of a holder with notice. Merchants' Exchange Bank v. Lucknow (Minn.), 35 N.W. R. 434; Boutella v. Wheaton, 13 Pick. 499; Small v. Smith, 1 Denio, 583; Vallette v. Parker, 6 Wend. 613; Perry v. Patterson, 42 Am. Dec. 424 (Tenn.); Campbell Printing Press & Mfg. Co. v. Powell, 14 S.W. R. 245. The note therefore came into the possession of the bank through the medium of Hague, its cashier, and is treated by the bank as its property. The cashier of a bank is its executive officer by whom its debts are received and paid and its securities taken and transferred. Flecker v. Bank of the U.S., 8 Wheat. 338; Cochecho Ntl. Bank v. Haskell, 12 Am. Rep. 72; note to Corser v. Paul, 77 Am. Dec. 759. Therefore, Hague, the cashier, acted within the scope of his authority as such cashier in receiving this note into the bank. But if it should be contended that this rule does not apply in this case because of Hague's individual interest in the transaction, then we submit the plaintiff is nevertheless bound because it accepts the fruits of the transaction and ratified the same by bringing this suit. Johnson Harvester Co. v. Miller, 40 N.W. R. 429 (Mich.); Dexter v. Adams, 2 Denio, 644; Bank v. Town of Milford, 36 Conn. 93. See also authorities already cited in defendant's brief. The bank is chargeable with the knowledge of its cashier at the time it received the notes into its bank as to how the notes had been procured. Bank v. Sturtevant, 12 Cush. 372; Bank v. Cushman, 121 Mass. 490; Bridge Co. v. Bank, 3 N.W. 156. Nor is this rule otherwise even though the cashier, or other officer acting for the bank, participated in the act, the knowledge of which is to be charged to the bank. We call special attention to the following cases: Holden v. Bank, 72 N.Y. 286; Mills v. Mills, 17 N. E. 496; Bank v. Bank, 10 Gray, 532; Savings Inst. v. Bostwick, 19 Hun, 354; Bank v. Milford, 36 Conn. 93.

In Holden v. Bank, supra, the court in strong language, held: That it mattered not how the knowledge is obtained by the officer of the bank, whether while acting as agent of the bank or in any other capacity; the bank is still chargeable with the knowledge; and on page 293, the court, by inference, holds that even in a case where the cashier obtained a note for his own benefit, if he should discount it as cashier of the bank of which he was cashier, the bank would be chargeable with notice as to how the note was procured. See also: U. S. Bank v. Davis, 2 Hill, 452; Smith v. Anderson, N.Y. Supp., July 24, 1894; Loring v. Brodie, 134 Mass. 468; Bank v. Howe, 12 Am. St. Rep. 744; Johnson Harvester Co. v. Miller, supra. The evidence was admissible and should have been admitted to show that a condition precedent to the delivery of the note existed, in which case the burden of proof would have shifted upon the plaintiff to show that it obtained the note fairly, in good faith, and without knowledge of its infirmity. Thaddius Munroe v. Cooper, 5 Pick. 412; Cummings v. Thompson, 18 Minn. 246; Hall v. Thayer, 105 Mass. 218 and cases cited; 1 Daniels on Neg. Inst., § 791; 2 Rand. on Com. Paper, § 1023. A corporation may be in a legal sense guilty of a fraud. As a mere legal entity it can have no will, and cannot act at all, but in its relations to the public it is represented by its officers and agents and their fraud in the corporate course of dealings is in law the fraud of the corporation. Cragie v. Hadley, 52 Am. Rep. 9. A bank has no title to and cannot recover upon a note which it obtains by the fraudulent acts and representations of its officers. Nat'l Bank v. Howe, supra. The principle of the above case is strongly affirmed by the Supreme Court of the United States in the case of U. S. Bank v. State Bank, 96 U.S. 36, the court saying: "But surely it ought to require neither argument or authority to support the proposition, that, where the money or property of an innocent person has gone into the coffers of the nation by means of a fraud to which its agent was a party, such money or property cannot be held by the United States against the claim of the wronged and injured party. The agent was an agent for no such purpose. His doings were initiated by the underlying dishonesty and could confer no right upon his principal. A different result would be reproach to our jurisprudence." Whether Hague acted as agent for the bank was clearly a question for the jury; and to withdraw it from the jury was reversible error. Savings Bank v. Chase, 72 Me. 226.

Mr. George Sutherland, (Mr. P. L. Williams and Mr. Waldemar Van Cott, with him on his brief), for respondent.

[The arguments and the authoritles cited by counsel for respondent are found in the opinion of the Court. It is apparent that after counsel had exhausted his fund of argument and citation in answering the extensive brief of appellant, that a second or supplemental brief was served upon him by other counsel. This second brief, evidently, was not "oil for the troubled waters," because counsel proceeds at once under the same cover to answer it, and the brilliant exordium is quoted below in full, as it is one of the finest...