National Bank of the Republic v. Old Town Bank of Baltimore

• Decision Date: 07 January 1902
• Docket Number: 786.
• Citation: 112 F. 726
• Parties: NATIONAL BANK OF THE REPUBLIC v. OLD TOWN BANK OF BALTIMORE.
• Court: U.S. Court of Appeals — Seventh Circuit

112 F. 726

NATIONAL BANK OF THE REPUBLIC v. OLD TOWN BANK OF BALTIMORE.

No. 786.

United States Court of Appeals, Seventh Circuit.

January 7, 1902

Herbert Z. Davis, for plaintiff in error.

Arthur G. Waite, for defendant in error.

Charles H. Horn and Wilson S. Horn, of the state of Ohio, J. M. C Horn, of the state of Washington, Clatonia Wright, of the state of Minnesota, and Mrs. Sidney K. Swander, of the state of Illinois, were each made legatees under the will of Joseph Horn, of Baltimore, in the state of Maryland; and each was also entitled, as heir at law, to share in the distribution of the estate. These legatees and distributees employed one W. J. Fairman, an attorney at law in the city of Chicago, to represent them in any proceeding in the administration and settlement of the estate, and to receive from the executors the amount coming to them as distributees. Fairman retained the law firm of Elliott & Hoffman, of Baltimore, to assist in procuring the settlement of the estate. In the year 1896 the executors paid to Elliott & Hoffman certain specific legacies, which were remitted to Fairman, and by him paid to the persons entitled. Litigation arose effecting the estate respecting claims and demands filed against it, in which Elliott & Hoffman and Fairman defended the interests of the parties named; the former not being in direct communication with the clients of Fairman, but corresponding with them in reference to all matters connected with the litigation and the estate. In the month of March, 1898, the estate being ripe for distribution, the executors required receipts from the distributees for their shares, respectively; and Fairman procured from his clients such receipts, forwarded them to Elliott & Hoffman, who delivered them to the executors, and received from them the amount of the distributive shares. Fairman had agreed with Elliott & Hoffman that they should charge 10 per cent. of the amount collected for their services, and that Elliott & Hoffman should retain two-thirds of the fee. In March, 1898, Elliott & Hoffman received from the executors the amount coming to each of the distributees named, deducted from the total amount the fee charged, drew their checks on the National Mechanics' Bank of Baltimore to W. J. Fairman for his one-third of the 10 per cent. and drew their five checks, each for the sum of $605.61, and payable, respectively, to the order of the distributee entitled thereto, and forwarded the checks to Fairman, who indorsed them, respectively, in the name of his client 'By W. J. Fairman, Attorney,-- W. J. Fairman,' and deposited them with the National Bank of the Republic of Chicago to his credit on account. This bank in due course of business forwarded them for collection to the Old Town Bank of Baltimore, by which they were presented through the Baltimore clearing house to the National Mechanics' Bank, upon which they were drawn, and were paid by that bank; the amount being credited by the Old Town Bank to the account of the National Bank of the Republic. On or about April 1, 1898, all of these checks were delivered by the National Mechanics' Bank to Elliott & Hoffman, who at the time made no objection to the indorsements of any of the checks, but afterwards, on the 9th of May, 1898, being informed that Fairman had not settled with and paid to his clients the amount so collected by him, except as to the amount due Mrs. Sidney K. Swander, returned to the National Mechanics' Bank the four checks for $605.61 each, with the statement that the indorsements thereon were not satisfactory to them; and thereupon that bank delivered the checks to the Old Town Bank, and demanded and received from it the amount, and the latter bank afterwards brought this suit to recover the amount so paid. Fairman from time to time checked on the National Bank of the Republic, and drew out the whole amount of these checks, prior to any notice to that bank of the claim of Elliott & Hoffman that the indorsements were irregular. Subsequently Fairman, after repeated demand, paid to each of the four unpaid legatees the sum of $125, amounting in all to $500, which was paid out of the moneys received by him upon the checks forwarded by Elliott & Hoffman. Fairman had no express authority to indorse any of the checks, aside from such authority as may have been vested in him by virtue of his employment as stated; and the payees, except as may be inferred from the facts stated, never subsequently ratified the indorsements, or received any benefit of them except to the extent of their respective shares of the $500 paid by Fairman. The facts stated were stipulated by the parties, and, upon a trial by the court without a jury, judgment for the defendant below was asked and refused, and judgment was rendered for the plaintiff below, the Old Town Bank of Baltimore, to review which a writ of error is sued out.

Before JENKINS and GROSSCUP, Circuit Judges, and BUNN, District Judge.

JENKINS Circuit Judge, after stating the facts as above, .

The authority to collect and to receive from the executors the amount coming to the distributees included all the usual means of executing that authority with effect (Story, Ag Sec. 58), and all appropriate modes and reasonable modes are deemed to be within the scope of the authority conferred (Leroy v. Beard, 8 How. 451, 468, 12 L.Ed. 1151). The authority is limited to the...