National Safe Deposit, Savings Trust Company v. William Hibbs

• Citation: 57 L.Ed. 1241,229 U.S. 391,33 S.Ct. 818
• Decision Date: 10 June 1913
• Docket Number: No. 79,79
• Parties: NATIONAL SAFE DEPOSIT, SAVINGS, & TRUST COMPANY of the District of Columbia, Plff. in Err., v. WILLIAM B. HIBBS
• Court: U.S. Supreme Court

229 U.S. 391

33 S.Ct. 818

57 L.Ed. 1241

NATIONAL SAFE DEPOSIT, SAVINGS, & TRUST COMPANY of the District of Columbia, Plff. in Err.,

v WILLIAM B. HIBBS.

No. 79.

Argued April 14 and 15, 1913.

Decided June 10, 1913.

Messrs. Charles L. Frailey and A. S. Worthington for plaintiff in error.

Messrs. J. J. Darlington and W. C. Sullivan for defendant in error.

Mr. Justice Day delivered the opinion of the court:

This case is in this court upon writ of error to the judgment of the court of appeals of the District of Columbia (32 App. D. C. 459), affirming the judgment of the supreme court of the District of Columbia in an action brought by the plaintiff in error, hereinafter called the bank, against the defendant in error, for the alleged conversion of certain shares of stock. The case was tried upon an agreed statement of facts, from which it appears:

The plaintiff in error has been doing a general banking business in the city of Washington, including the making of loans to its customers on promissory notes secured by stock collateral, and, to a limited extent, the buying and selling of stock for its customers and occasionally for itself.

On March 12, 1903, the bank made a loan to one T. M. Kelley of $12,500, for which he gave his promissory note, payable on demand, and deposited with the bank certain stock certificates of the Mergenthaler Linotype Company as collateral security. Each of the certificates stood in the name of T. M. Kelley, and on its face recited that it was transferable by him, in person or by proxy, only upon the books of the company upon surrender of the certificate, and each upon its back contained an assignment with power of attorney to transfer the stock upon the books of the company, signed in blank by Kelley, whose signature was duly attested.

One Willard H. Myers had been in the continuous employ of the bank for over twenty years, and had committed no acts inconsistent with his duty to the bank, and was trusted as a faithful employee. During the last ten years of his employment he had been general bookkeeper and assistant note teller, a part of his duties being to receive and enter upon the cash book of the bank the payment of loans by customers, and to procure from one of the officers of the bank and deliver to such customers the collateral security pledged for the loans, it being usual, in the ordinary course of business, for the bank to thus deliver certificates to him upon his request. He had no authority and it was not a part of his employment to dispose of, by sale, pledge, or otherwise, any stock held as collateral by the bank, or owned by it or any of its customers.

On May 26, 1904, Myers requested the secretary of the bank to procure from the vault where such securities were kept the certificates deposited by Kelley, whereupon the secretary delivered the certificates to Myers, in the usual course of business, for the purpose of having them returned to Kelley, similar requests having been made by Myers prior thereto. Kelley had not paid the loan or asked for the delivery of the stock, and Myers made no entry in the cash book.

The day following, May 27th, Myers delivered two of such certificates to the cashier of the defendant in error, a stock broker, for sale on his account, and at the request of the cashier, as was the usual custom where the signatures of the assignor and attesting witness are unknown, Myers, as a further identification of such signatures, signed his name to the attestation clause of the assignment. The defendant in error being out of the city, the certificates were turned over to another broker, by whom they were on that day sold on the Washington stock exchange, and on the same day Myers received the check of the defendant in error for the proceeds of the sale, which he subsequently cashed.

Myers did not represent to the cashier of the defendant in error that he was selling the stock for the bank, or that he was acting for it in any way, or indicate that he did not own the stock, nor did the defendant in error or his cashier know or have cause to suspect that the stock did not belong to Myers. The stock was sold, however, without the knowledge or consent of the bank or Kelley. By the custom of banks, brokers, and others dealing in stock, which custom was known to the bank, the possession of stock certificates assigned in blank and attested, as were the certificates here in controversy, has been recognized, in the absence of knowledge or cause of suspicion to the...