Merchants' National Bank of St. Paul v. McNeir
| Decision Date | 03 October 1892 |
| Citation | 53 N.W. 178,51 Minn. 123 |
| Parties | Merchants' National Bank of St. Paul v. George McNeir, as Receiver of the First National Bank of Anoka |
| Court | Minnesota Supreme Court |
July 8 1892, Argued
Appeal by defendant, George McNeir, receiver of the First National Bank of Anoka, Minnesota, from an order of the District Court of Hennepin County, Lochren, J., made March 19, 1892 refusing a new trial.
This action was brought by the Merchants' National Bank of St Paul, Minnesota, against George McNeir, who was appointed by the comptroller of the currency receiver of the First National Bank of Anoka, Minnesota. The purpose of the action was to establish a claim in favor of the plaintiff bank against the estate of the First National Bank of Anoka, by reason of an indorsement of the Anoka Bank's name on a note for $ 10,000, made by Maria B. Nell to P. F. Pratt indorsed by Pratt individually, and by "First National Bank of Anoka, by P. F. Pratt, Cashier," and discounted by plaintiff.
The case was tried January 18, 1892, before Canty, J., without a jury. The findings were made February 13, 1892. The court ordered judgment in favor of plaintiff. A motion for a new trial was denied by Judge Lochren, who sat because of the absence of Judge Canty.
The order denying a new trial is affirmed.
Jackson & Atwater, for appellant.
The facts show that the note was Pratt's own property; that the discount of it was his individual transaction; that the plaintiff was not justified in assuming that Pratt had authority to bind his bank by the indorsement of its name on the note. We are unable to see any circumstances to distinguish the case from one in which an unauthorized use of the principal's name has been made by an agent for his own benefit, and in a transaction which was, on its face, outside of the business of the principal. Clafin v. Farmers' & Citizens' Bank, 25 N.Y. 293; West St. Louis Sav. Bank v. Shawnee Co. Bank, 95 U.S. 557; Anderson v. Kissam, 35 F. 699; American Exchange Bank v. Georgia Const. & Investment Co., 87 Ga. 651; Merchants' Mutual Ins. Co. v. Excelsior Ins. Co., 4 Mo.App. 578. In these cases and others it is uniformly held that a bank official has not implied authority to certify his own check; to issue a cashier's check for his own benefit; to indorse the name of his bank on his own note, etc. 1 Morse, Banks, 202, 208, 297, 330,364.
Young & Lightner, for respondent.
If the plaintiff believed that Pratt was authorized to bind the Anoka Bank by his indorsement, and that he was acting for the bank in procuring the discount, and if that belief could in good faith be entertained by plaintiff, then the Anoka Bank is bound by the indorsement. The procuring of this discount was within the general powers of Pratt, as cashier. Wild v. Bank of Passamaquoddy, 3 Mason, 505; West St. Louis Sav. Bank v. Shawnee Co. Bank, 95 U.S. 557; 1 Morse, Banks, 326-330.
"Good faith" does not mean that the purchaser of negotiable paper is bound to exercise such care and caution as a prudent man would exercise. Notice merely of facts that would pet a prudent man upon inquiry, or even negligence, is not sufficient, to show bad faith. Welch v. Sage, 47 N.Y. 143; Merchants' Nat. Bank v. Hanson, 33 Minn. 40; Magee v. Badger, 34 N.Y. 247; Freeman's Nat. Bank v. Savery, 127 Mass. 78. The facts that the note was payable to Pratt individually, and did not bear the marks of having been discounted by the Anoka Bank, or that the plaintiff gave a check for part of the proceeds that was payable to Pratt individually, do not show that plaintiff had knowledge that would impair its claim to be a bona fide holder of the note. Ihmsen v. Negley, 25 Pa. 297; Haldeman v. Bank of Middletown, 28 Pa. 440; Redlon v. Churchill, 73 Me. 146; Murray v. Lardner, 3 Wall. 110; Hotchkiss v. National Banks, 21 Wall. 354; Mitchell v. Catchings, 23 F. 710; Comstock v. Henneberry, 76 Ill. 212; Fox v. Bank of Kansas City, 30 Kans. 441; Nichols v. Sober, 38 Mich. 678; Johnson v. Way, 27 Ohio St. 374.
This action was tried by the court, and from its findings the following facts appear: One P. F. Pratt was during all the time, from the year 1883 until after January 16, 1889, the cashier of the First National Bank of Anoka, which bank, through its cashier, had, during all that time, transacted a large amount of business with the plaintiff.
On September 17, 1888, one Maria B. Nell had executed her promissory note to the First National Bank of Anoka for $ 5,000, with interest payable in four months from date without grace; and September 27th following, the plaintiff discounted this note, and paid the face value thereof, less the usual discount, to the First National Bank of Anoka, and the same was thereupon indorsed, and delivered to the plaintiff, and the Anoka bank thus became conditionally liable thereon as indorser. Afterwards, on the 16th day of January, 1889, the day before this note became due, the maker thereof, Mrs Nell, executed another promissory note, payable to Pratt, whereby she agreed to pay to his order, six months thereafter, the sum of $ 10,000, with interest at 10 per cent., payable at the plaintiff's bank in St. Paul. The court further specifically finds as follows: That thereafter, on the 16th day of January, 1889, the day before the first-named note became due, Pratt appeared at the bank of the plaintiff with the last-mentioned note for $ 10,000, with the following indorsements thereon, all made in his handwriting: "P. F. Pratt;" and "First National Bank of Anoka, P. F. Pratt, Cr.," -- which was his usual way of signing his name as cashier of the Anoka bank. Plaintiff knew that all the indorsements were in the handwriting of Pratt, who then requested the officers of the plaintiff bank to discount the note for the First National Bank of Anoka, and to take and retain the necessary part of the proceeds thereof to pay the amount due upon the first-mentioned note. Pratt assumed to act for the Anoka bank in the transaction,...
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