Argued
April 4, 1893
Appeal, No. 220, Jan. T., 1893, by defendant, John P
McGrath, from judgment of C.P. No. 2, Phila. Co., June T.
1881, No. 99, on verdict for plaintiff.
Issue
to determine validity of judgment.
Judgment
was entered in the penal sum of $10,000 on warrant of
attorney, accompanying bond given by defendant as treasurer
of plaintiff association. The judgment was open and plaintiff
filed a statement claiming that defendant had
"wrongfully, illegally and unjustly" paid
"over to a person or persons unknown to said plaintiff,
out of the money of the said association, the sum of
seventy-seven hundred and forty-five dollars, which sums of
money were in no wise due by the plaintiff to anyone, and for
which sums of money no order or orders had been drawn upon
him by the board, or previously approved by said board, and
the said sums of money the said defendant has wrongfully
withheld and still does wrongfully withhold from plaintiff,
and has failed and still does fail to pay and deliver unto
his successor in office the sums wrongfully withheld as
aforesaid." Defendant pleaded non assumpsit and payment.
The
material portions of the by-laws of the plaintiff association
were as follows:
"The president shall sign all orders on the treasurer
for appropriations made by the board, and he shall perform
such other duties as usually pertain to this office or which
may hereafter be prescribed by the by-laws of the association
or resolutions of the board."
"The
secretary shall keep accurate minutes of each meeting of the
board and read the same at the next meeting of the board. He
shall also keep accurate minutes of each meeting of the
association and read the same at the ensuing stated meeting
of the board. He shall keep accurate accounts with all the
stockholders and shall attest all orders on the treasurer for
appropriations made by the board, and shall notify the
stockholders of the annual meetings, by public notice in a
newspaper published in the neighborhood, and also notify the
directors of all special or adjourned meetings, at the
expense of the association."
"The
treasurer shall receive all moneys paid into the association,
and pay all orders drawn upon him by order of the board, if
signed by the president and attested by the secretary. He
shall have in charge all bonds, mortgages, searches, policies
of insurance, etc., on all property upon which money is
loaned by the association, first giving his receipt therefor
to the secretary."
The
orders which defendant paid to the secretary, and for which
suit was brought, read: "Mr. J. P. McGrath, treasurer,
pay to" the payee the sum named. They were signed by the
president and attested by the secretary, and the indorsements
of the payee were forged by the secretary.
Defendant's
points were as follows:
"1.
If the jury find from the evidence that the defendant paid
the orders in evidence, in good faith, and with no actual
knowledge of any fraud committed by the secretary, and the
jury find that the said orders were signed by the president
and secretary, the verdict should be for the defendant."
Answered in charge. [3]
"2.
The defendant was only bound to use ordinary care under the
circumstances, and if the jury find that the defendant
honestly relied upon what the secretary told him, and paid
the orders signed by the president and secretary, the verdict
should be for the defendant." Answered in charge. [4]
"3.
Under all the evidence the verdict should be for the
defendant." Refused. [6]
The
charge of the court was as follows, by HARE, P.J.:
"This
suit is brought to compel reimbursement of money, paid by the
defendant in his capacity as treasurer, to persons who were
not entitled to receive it, or more accurately to the
secretary of the association, who induced the defendant to
make the payment by forgery and falsehood. The plaintiff
contends that, however careful the defendant may have been,
he is none the less answerable, because the money had not
been appropriated by the board of directors, as the
constitution and by-laws contemplated, and because the
payments were made professedly for stock said to have been
withdrawn, and a resolution of the board required that no
such withdrawal should take place without their approval.
"I
am unable to concur in this view, for the following reasons:
The by-laws of the association provide that 'All orders
on the treasurer for appropriations made by the board shall
be signed by the president and attested by the
secretary.' The first steps, therefore, were to be taken
by the president and secretary, and it would be their duty to
ascertain that the money had been appropriated and was due
before authenticating the order with their signatures. A man
who signs a paper directing another to make a payment is as
responsible as if the instrument were written by him, and
when the secretary attested the order he became a voucher for
its genuineness. It was consequently the duty of these
officers to ascertain that all the requisites had been
fulfilled; and the treasurer might regard their signatures as
evidence which dispensed with inquiry.
"I
do not think that the words 'appropriations made by the
board' materially vary the case, because it was the duty
of the president and secretary to ascertain whether such an
appropriation had been made before signing the order. The
same answer may be made to the argument that the board had
not sanctioned or approved of the withdrawal of the stock,
because the signatures of the president and secretary
justified the belief that they had looked into the matter and
that all was right.
["The
remaining question 'was the treasurer negligent?'
does not appear to me so clear. It is said he was an
unsalaried officer and therefore not bound to take as much
care as if he had been paid. In many instances this argument
holds good, but it is inapplicable where a different rule is
laid down by the law or results from an express or implied
agreement. A person who, with or without reward, has charge
of the funds of others as a trustee or treasurer, should, I
think, take as much care as does a prudent man in the conduct
of his own affairs. He may not have the spur of
self-interest, but he should reflect that if a loss accrues
through his negligence it will fall on those who left their
money in his hands.]
"It
is said had the defendant examined the books and minutes of
the association he would have found that the board had not
sanctioned the withdrawal of the stock in question, and that,
in point of fact, it did not exist. In considering this
argument we should remember what I have already observed,
that the first steps were to be taken by the persons who drew
and attested the orders. If such an investigation was
requisite it should have been made by the president and
secretary before directing the payment of the money, and the
defendant might reasonably presume that they performed their
duty.
"It
cannot be said that he acted without inquiry, because he was
informed in every instance that the money was wanted to pay
for the withdrawal of stock, and he had no reason to suppose
the secretary was guilty of fraud and forgery. Our conduct
through life is founded on the belief that the persons around
are fairly honest where there is no reason to think the
contrary. Business could not be carried on if we could not
accept and act upon the statements of those with whom we
deal, without verifying their truth.
"Where
a rule is laid down for our guidance it must be scrupulously
followed, and if the defendant had parted with the funds of
the association without an order from the president, it would
be immaterial that he was deceived by the secretary. The
course actually marked out was that they should draw and sign
the orders, and the treasurer should pay them.
"The
plaintiff does not impeach the defendant's good faith,
and [if you find that he acted with due care in making the
payments the verdict should be in his favor.]
"I
decline the plaintiff's points and the last point
presented by the defendant, and in answering his remaining
points substitute the word 'due' for
'ordinary.' [The term 'ordinary care' may
have a definite meaning among lawyers, but does not, I fear,
convey a clear idea to people in general. What care should be
taken in each case depends on circumstances. I therefore say
that if the defendant acted with due care in reliance on the
orders drawn by the president and secretary he is not
answerable for the loss of the money."]
Verdict
and judgment for plaintiff for $1,292.34.
A
motion for a new trial was refused in the following opinion
by HARE, P.J.:
"It
seems proper to say in dismissing the motion for a new trial
that had the case been left to me as one of law and fact I
should have decided against the plaintiff. Still if there was
evidence that the defendant was negligent, the question was
eminently one for the constitutional tribunal, and we ought
not to set aside the verdict. Whether there was enough to
carry the case to a jury is to me doubtful; and, could the
point have been reserved at the trial, our conclusion, I am
inclined to think, would have been favorable to the
defendant. The duty of a subordinate tribunal is, however
often best performed by putting the case in a shape that will
facilitate a speedy decision by the tribunal of last resort.
Should the Supreme Court be of opinion that the orders drawn
on the defendant, John P. McGrath, in his capacity as
treasurer, by the president and secretary of the corporation
plaintiff, and authenticated by their signatures, were a
warrant for the payment of the sums therein specified, and
exonerated McGrath from...
