Kissam v. Anderson
| Decision Date | 16 May 1892 |
| Citation | 12 S.Ct. 960,145 U.S. 435,36 L.Ed. 765 |
| Parties | KISSAM et al. v. ANDERSON |
| Court | U.S. Supreme Court |
STATEMENT BY MR JUSTICE BREWER.
The First National Bank of Albion was organized under the national banking law, December 22, 1863, with a capital stock of $50,000, consisting of 500 shares of $100 each, with a privilege of increase, and in fact afterwards increased to $100,000. It was reorganized under the act of July 12, 1882, by amended articles of association filed January 12 and approved February 24, 1883. On August 21, 1884, it closed its doors, and the defendant in error was appointed receiver, and took possession August 28, 1884. On January 7, 1885, as such receiver, he commenced this action against the plaintiffs in error in the circuit court of the United States for the southern district of New York. On April 25, 1888, the case was tried before a jury, and a verdict rendered in favor of the plaintiff for $147,759.71. A judgment was rendered on the verdict, and to reverse such judgment defendants sued out this writ of error.
The proposition upon which this suit was maintained was that A. S. Warner, the cashier of the Albion Bank, wrongfully withdrew the funds of that bank for the purpose of a personal speculation in stocks; and that the defendants, Kissam, Whitney & Co., received those moneys with knowledge that they were thus withdrawn, and used them for the benefit of Warner in his stock speculations. The defendants, among other things, pleaded that the most of the money received from Warner had been returned to the bank; and herein lies the principal question for our consideration, and, to a clear understanding of all that is involved in it, a detail of the facts is necessary.
Prior to March 29, 1879, R. S. Burrows was president of the Albion Bank; Alexander Stewart, his son-in-law, vice president; and Warner, cashier. At that date Burrows died. Stewart became president, and so remained until he died, November 20, 1881; Warner in the mean time remaining cashier. Thereafter Warner became president, and W. R. Burrows, a son of R. S. Burrows, cashier, and both continued as such until shortly before the failure of the bank. The bank really belonged to R. S. Burrows in his lifetime, he owning all but 20 shares. The directors, pending the transactions hereafter to be reviewed, were L. Burrows, Alexander Stewart, W. R. Burrows, Louise C. Burrows, and Warner. With the exception of L. Burrows, who was a brother of R. S. Burrows, the other four were the executors and executrix of R. S. Burrows; Warner, as appears, being the managing executor as well as the real official head of the bank. Through his defalcations, which ran up into the hundreds of thousands, the bank ultimately failed, and a receiver was appointed. The firm of Kissam, Whitney & Co., the defendants, was formed in May, 1880. Prior to that time the firm of Chase & Atkins had been in existence for some years, and that firm had bought and sold stocks for Warner. Whitney and Washburn, who, with Kissam, composed the firm of Kissam, Whitney & Co., had been clerks in the employ of Chase & Atkins, and a few months before had received small interests therein as partners. Kissam had no connection with that firm. When Chase & Atkins sold out to Kissam, Whitney & Co. the latter took, among other things, the account with Warner. At that time, and among the assets transferred, were stocks to the amount of $348,086.19, held for Warner, and for which Kissam, Whitney & Co. paid Chase & Atkins. Thereafter, and between that time and August 26, 1881, Warner sent to defendants 12 checks, the dates and amounts thereof being as follows:
---------
These checks were drawn by him as 'cashier,' on the Third National Bank of New York city, the regular correspondent of the Albion Bank; the first check being in this form:
'No. _____. New York, May 11, 1880.
'Third National Bank of the City of New York pay to the order of Kissam, Whitney & Co. ten thousand dollars.
— and the others substantially likeit. The Albion Bank was a country bank, with, as heretofore stated, a capital stock of $100,000, and an average deposit of about $200,000. On these checks, Kissam, Whitney & Co. drew from the Third National Bank the sums named, and used the same in their customers' stock transactions. Afterwards, and from time to time, they returned to the Third National Bank certain sums of money, which were entered by that bank to the credit of the Bank of Albion, and notice thereof was sent in the regular course of business by the former to the latter bank; but, by reason of facts hereafter to be noticed, not all of these deposits were entered on the books of the Albion Bank. The following is a statement of the details of such deposits:
Not Entered in
of Albion Bank. Bank.
It will be noticed that three of these deposits were made before the last two checks were sent to defendants. It will be noticed, also, that the moneys represented by these various deposits were returned to the same place from which the money was received on the checks sent to the defendants, to wit, the Third National Bank. In other words, the defendants received money belonging to the Albion National Bank from the Third National Bank; they returned to the Third National Bank a large portion of the money they had received. That money was accepted by the Third National Bank, passed to the credit of the Albion Bank, and the latter notified thereof in the regular way, to wit, by monthly statements. It is true that many of these credits were not entered by the latter on its books. The Albion Bank was at that time managed by Warner, he being the cashier. There was a bookkeeper in constant attendance, the president occasionally present, and five directors to supervise; but the active man was Warner, who was also the real manager of the Burrows estate, which owned substantially all the stock. The monthly reports from the Third National Bank, when opened at all, were apparently opened by Warner alone. Indeed, after the receiver was appointed, in 1884, some of these monthly reports were found in the vaults of the banks till unopened. There was no direct evidence of any conspiracy...
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