Preston v. Prather

• Decision Date: 05 January 1891
• Citation: 137 U.S. 604,11 S.Ct. 162,34 L.Ed. 788
• Parties: PRESTON et al. v. PRATHER et al
• Court: U.S. Supreme Court

137 U.S. 604

11 S.Ct. 162

34 L.Ed. 788

PRESTON et al. v. PRATHER et al.

January 5, 1891.

The plaintiffs below, the defenants in error here, are citizens of Missouri, and for many years have been copartners, doing business at Maryville, in that state, under the name of the Modaway Valley Bank of Maryville. The efe ndants below are citizens of different states, one of them of Michigan, and the others of Illinois, and for a similar period have been engaged in business as bankers at Chicago, in the latter state. In 1873 the plaintiffs opened an account with the defendants, which continued until the spring of 1883. The average amount of deposits by them with the defendants each year during this period was between two and four hundred thousand dollars. Interest was allowed at the rate of 2 1/2 per cent. on the deposits above $3,000, but nothing on deposits under that sum. On the 7th of July, 1880, the plaintiffs purchased of the defendants 4 per cent. bonds of the United States to the nominal amount of $12,000, but the bonds being at a premium in the market, the plaintiffs paid for them, including the accrued interest thereon, $13,005. The purchase was made upon a request by letter from the plaintiffs, and all subsequent communications between the parties respecting the bonds, and the conditions upon which they were to be held, are contained in their correspondence. The letter directing the purchase concluded with a request that the defendants send to the plaintiffs a description and the numbers of the bonds, and hold the same as a special deposit. In the subsequent account of the purchase rendered by the defendants, the plaintiffs were informed that the bonds were held on special deposit posit subject to their order. The numbers of the bonds appear upon the bond register kept by the defendants, and the bonds remained in their custody until some time between November, 1881, and November, 1882, when they were stolen and disposed of by their assistant cashier, one Ker, who absconded from the state on the 16th of January, 1883. The present action is brought to recover their value.

P. S. Groscupp, John P. Wilson W. P. Fennell, and M. D. Brainard, for plaintiff in error.

Huntington W. Jackson and Robert Hervey, for defendant in error.

FIELD, J.

By the defendants it was contended below, in substance, and the contention is renewed here, that the bonds being placed with them on special deposit for safe-keeping, without any reward, promised or implied, they were gratuitous bailees, and were not chargeable for the loss of the bonds, unless the same resulted from their gross negligence; and they deny that any such negligence is imputable to them. On the other hand, the plaintiffs contended below, and repeat their contention here, that, assuming that the defendants were in fact simply gratuitous bailees when the bonds were deposited with them, they still neglected to keep them with the care which such bailees are bound to give for the protec- tion of property placed in their custody; and further, that subsequently the character of the bailment was changed to one for the mutual benefit of the parties.

Much of the argument of counsel before the court, and in the briefs filed by them, was unnecessary,—indeed, was not open to consideration,—from the fact that the case was heard, upon stipulation of parties, by the court, without the intervention of a jury, and its special findings cover all the disputed questions of fact. There is in the record no bill of exceptions taken to rulings in the progress of the trial, and the correctness of the findings upon the evidence is not open to our consideration. Rev. St. § 700. The question whether the facts found are sufficient to support the judgment is the only one of inquiry here.

Undoubtedly, if the bonds were received by the defendants for safe-keeping, without compensation to them in any form, but exclusively for the benefit of the plaintiffs, the only obligation resting upon them was to exercise over the bonds such reasonable care as men of common prudence would usually bestow for the protection of their own property of a similar character. No one taking upon himself a duty for another, without consideration, is bound, either in law or morals, to do more than a man of that character would do generally for himself under like conditions. The exercise of reasonable care is in all such cases the dictate of good faith. An utter disregard of the property of the bailor would b an act of bad faith to him. But what will constitute such reasonable care will vary with the nature, value, and situation of the property, the general protection afforded by the police of the community against violence and crime, and the bearing of surrounding circumstances upon its security. The care usually and generally deemed necessary in the community for the security of similar property, under like conditions, would be required of the bailee in such cases, but nothing more. The general doctrine, as stated by text-writers and in judicial decisions, is that gratuitous bailees of another's property are not responsible for its loss unless guilty of gross negligence in its keeping. But gross negligence in such cases is nothing more than a failure to bestow the care which the property in its situation demands. The omission of the reasonable care required is the negligence which creates the liability; and whether this existed is a question of fact for the jury to determine, or by the court where a jury is waived. See The New World v. King, 16 How. 470, 474, 475; Railroad Co. v. Lockwood, 17 Wall. 357, 383; Railroad Co. v. Arms, 91 U. S. 489, 494. The doctrine of exemption from liability in such cases was at one time carried so far as to shield the bailees from the fraudulent acts of their own employes and officers, though their employment embraced a supervision of the property, such acts not being deemed within the scope of their employment. Thus, in Foster v. Bank, 17 Mass. 479, the bank was, in such a case, exonerated from liability for the property intrusted to it, which had been fraudulently appropriated by its cashier, the supreme judicial court of Massachusetts holding that he had acted without the scope of his authority, and therefore the bank was not liable for his acts any more than it would have been for the acts of a mere stranger. In that case a chest containing a quantity of gold coin, which was specified in an accompanying memorandum, was deposited in the bank for safe-keeping, and the gold was fraudulently taken out by the cashier of the bank and used. It was held, upon the doctrine stated, that the bank was not liable to the depositor for the value of the gold taken. In the subsequent case of Smith v. Bank, 99 Mass. 605, 611, the same court held that the gross carelessness which would charge a gratuitous bailee for the loss of property must be such as would affect its safe-keeping, or tend to its loss, implying that liability would attach to the bailee in such cases, and to that extent qualifying the previous decision. In Scott v. Bank, 72 Pa. St. 479, 480, the supreme court of Pennsylvania asserted the same doctrine as that in the Massachusetts case, holding that a bank, as a mere depositary, without special contract or reward, was not liable for the loss of a government bond depos- ited with it for safe-keeping, and aftewards stolen by one of its clerks or tellers. In that case it was stated that the teller was suffered to remain in the employment of the bank after it was known that he had dealt once or twice in stocks, but this fact...