(110 U. S. 59) HOLLAND v. CHAMBERS.1 (January 7, 1884.) REMOVAL OF CAUSE-REV. ST. § 639, SUBD. 2-ACT OF MARCH 3, 1875, c. 137. The second subdivision of section 639 of the Revised Statutes was repealed by the act of March 3, 1875, c. 137. Under the act of 1875 the petition for removal must be filed in the state court before or at the term at which the cause could be first tried. In Error to the Circuit Court of the United States for the Eastern District of Missouri. No brief filed for plaintiff in error. Jas. O. Broadhead, for defendant in error. WAITE, C. J. This is a writ of error brought under section 5 of the act of March 3, 1875, c. 137, (18 St. 470,) to review an order of the circuit court remanding a cause which had been removed from a state court. The facts are as follows: The suit was begun in the state court on the nineteenth of July, 1879, by Chambers, as plaintiff, against C. M. Swope and Joseph B. Holland, defendants, to recover damages for writing and publishing an alleged libel. An answer was filed by Holland on the sixth of October, 1879, and an amended answer on January 24, 1880. A reply was filed February 5th. At the April term, 1880, a trial was had, which resulted in a verdict and judgment for $20,000 in favor of Chambers. This judgment was afterwards set aside by the court and a new trial granted. On the twentieth of January, 1882, Holland petitioned for the removal of the suit as against him to the circuit court of the United States for the eastern district of Missouri. The petition set forth that Holland was a citizen of Illinois, and both Swope and Chambers citizens of Missouri; "that said suit is one in which there can be a final determination of the controversy, so far as it concerns your petitioner, without the presence of the said defendant Swope as a party in said cause; and that your petitioner desires to remove said suit as against your petitioner, and so far as concerns him, into the circuit court, in pursuance of the act of congress in that behalf provided, to-wit, the Revised Statutes of the United States, section 639, subdivision second." Upon these facts the order of the circuit court remanding the cause was clearly right. The second subdivision of section 639 was repealed by the act of March 3, 1875, c. 137. That was settled in Hyde v. Ruble, 104 U. S. 407, and King v. Cornell, 106 U. S. 395; [S. C. 1 SUP. CT. REP. 312.] Under the act of 1875 the petition for removal must be filed in the state court before or at the term at which the cause could be first tried. This suit could not only have been tried, but it actually was S. C. 11 Fed. Rep. 209. tried once, nearly two years before the petition to remove. Such being the case, it is needless to inquire whether there might have been a removal under that act if an application had been made in time and in proper form. The order remanding the cause is affirmed. (110 U. S. 7) MARTIN, Sheriff, etc., and others v. WEBB and others, Trustees, etc. (January 7, 1884.) BANKING CORPORATION-CHARTER-AUTHORITY OF CASHIER-PAROL EVIDENCEGENERAL COURSE OF BUSINESS-KNOWLEDGE OF DIRECTORS. A banking corporation, whose charter does not otherwise provide, may be represented by its cashier in transactions outside of his ordinary duties, without his authority to do so being in writing, or appearing in the records of the proceedings of the directors. His authority may be by parol, and collected from circumstances, or implied from the conduct or acquiescence of the directors. It may be inferred from the general manner in which, for a period sufficiently long to establish a settled course of business, he has been suffered by the directors, without interference or inquiry, to conduct the affairs of the bank. When, during a s ries of years, or in numerous business transactions, he has been permitted, in his official capacity, and without objection, to pursue a particular course of conduct, it may be presumed, as between the bank and those who in good faith deal. with it upon the basis of his authority to represent the corporation, that he has acted in conformity with instructions received from those who have the right to control its operations. That which directors ought, by proper diligence, to have known as to the general course of the bank's business, they may be presumed to have known in any contest between the corporation and those who are justified by the circumstances in dealing with it upon the basis of that course of business. Appeal from the Circuit Court of the United States for the Western District of Missouri. Jeff. Chandler and Eppa Hunton, for appellants. Jas. S. Botsford, R. T. Merrick, and M. F. Morris, for appellees. HARLAN, J. This is an appeal from a decree in two suits in equity commenced in one of the courts of the state of Missouri, and thence removed into the circuit court of the United States for the western district of that state, where by consent they were consolidated for final hearing. The question presented is whether the appellant the Daviess County Savings Association, a banking corporation of Missouri, doing business at Gallatin, in that state, is, under the circumstances of this case, estopped to deny that the cancellation, in its name and by its cashier, of certain notes secured by trust deeds upon real estate, and the release of record of the liens given by those deeds, was by its authority and binding upon it. The facts bearing upon this question, as they are disclosed by the pleadings, testimony, and On stipulations of counsel, are substantially as will be now stated. the thirtieth day of June, 1879, one Patrick S. Kenney was largely indebted to that association. The indebtedness was secured by recorded deeds of trust upon several tracts of land, in some of which, embracing a large part of this indebtedness to the bank, his wife had not joined. These deeds bore date, respectively, February 8, 1872; November 17, 1873; December 20, 1873; August 28, 1874; September 21, 1874; May 24, 1875; and April 1, 1876. In three of them the trustee was Robert L. Tomlin, who, at the date of their execution and during the entire period covered by the transactions to be hereafter recited, was a director and the cashier of the bank. Kenney and wife had also executed and delivered a deed of trust upon a portion of the same lands, for the benefit of James D. Powers, to secure a debt of $5,000 and interest. As to the lands therein described, it gave a lien superior to that created by any of the before-mentioned deeds, except the one of date February 8, 1872. On the fifteenth day of July, 1875, and first day of November of the same year, respectively, the Exchange Bank of Breckinridge, Missouri, and one Thomas Ryan, obtained judgments for money against Kenney, which, on June 30, 1879, remained, or were believed by those interested in them to remain, liens superior to that given by the foregoing deed of April 1, 1876. It was desired by Tomlin, the cashier, to have Kenney's indebtedness to the bank in better shape than it was, and to secure further time on his indebtedness to other parties. He also deemed it important that the liens upon these lands, (whether created by trust deeds or judgments,) which were prior to those held by the bank, should be removed, and that Mrs. Kenney's signature be obtained to a trust deed or deeds in favor of the bank, covering all the lands of her husband. He therefore requested Kenney to obtain a loan of money sufficient to satisfy all liens prior to those held by the bank. Tomlin did not wish his bank to make further advancements to Kenney, believing the latter would be more prompt with strangers than with the bank in paying interest as it matured. In order to effect the desired result, application was made by the cashier to Frank & Darrow, of Corning, Iowa, for a loan to Kenney. After some negotiations, that firm made an arrangement with Albert S. Webb, R. L. Belknap, and William H. Kane, of New York, trustees under the wili of Henry R. Remsen, for a loan of money to Kenney for five years, at 8 per cent. interest, to be secured by a trust deed on his lands, which would give them a lien prior and superior to that held by all others, including the bank. It was expressly agreed between Frank & Darrow, representing the trustees of Remsen, on one side, and Kenney and Tomlin, the latter representing his bank, on the other side, that the money thus obtained should be applied, as far as necessary, to the debts secured by the before-mentioned Powers deed of trust, and to the two judgments against Kenney; that the balance should be paid to the bank, which should then cancel and surrender the notes held against Kenney, taking a new note from him, and enter of record satisfaction and release of its liens under the several deeds; that Kenney and wife should execute a deed of trust, giving a first lien to Remsen's trustees to secure the loan by them made; a like deed, giving a lien subordinate to that of Remsen's trustees, to secure Frank & Darrow in the sum of $1,000, the amount stipulated to be paid them for effecting the loan; that Kenney and wife should also make a deed of trust on the same lands to the Daviess County Savings Association, giving a lien subordinate to those given to Remsen's trustees and to Frank & Darrow, for the balance of their claims against Kenney remaining after crediting such portion of the $10,000 received from Remsen's trustees as should be paid to the bank. No part of the sum received from Remsen's trustees was paid directly to or disbursed by Kenney; but, conformably to the agreement between the parties, $5,200 of it was applied in satisfaction of the debt secured by the Powers deed of trust, $1,689.86 in discharge of the two personal judgments against Kenney, and the balance, $3,110.14, was paid to the bank. A new note was then executed to the bank by Kenney, and the $3,110.14 entered on its books as a partial payment thereof. Satisfaction was entered of record in the name of the bank by its cashier of all the debts held against Kenney, and the old deeds of trust held were also canceled of record in its name by the cashier. Deeds of trust executed by Kenney and wife, of date July 1, 1879, were then placed upon record, all on August 6, 1879, but distinctly giving liens upon the lands in the order already indicated. The new deed to the bank, in addition, expressly provides that the lien thereby created is subordinate to that given Remsen's trustees. The old notes of Kenney were marked by the cashier on the books of the bank as paid, and the new note entered as the one Kenney was to pay. The $3,110.14 went into the general funds of the bank, and was used in its business. The old notes and deeds, being first stamped by the cashier as "paid," were placed by him in an envelope maked with Kenney's address. The cashier had promised, when this arrangement was consummated, to send them to Kenney, but finding the package containing them to be bulky, they were held for delivery to him when he should call at the bank. The Daviess County Saving Association was organized in 1865. Of its paid-up capital stock, at the time of these transactions, all, except a very small amount, was owned by McFerran, Hemry, and Tuggle, -McFerran owning a majority of the whole stock. McFerran was elected president, and from sometime in 1870 until January 1, 1872, Tomlin was acting cashier, and from the latter date until January 1, 1881, he was cashier. At the outset the business seemed to have been managed entirely by the cashier under the general supervision or direction of McFerran. But, desiring to extend the field of his business operations, the latter removed in 1873 to Colorado, and there * engaged in banking business. He did not return to Missouri until February, 1881. During his absence, and up to 1879, he claimed to be the president of the association. But during the whole period of McFerran's absence the exclusive management of the business of the bank seemed to have been left to the cashier, without interference from any quarter. This state of things continued even after the election of Hemry as president on the first day of January, 1879. Tuggle, one of the directors, says he never gave much attention to the affairs of the bank. He resided some distance from Gallatin; came to town about once a month, staying sometimes a week; was in the bank frequently, but never gave much attention to its affairs; when there he would inquire of the officers how it was "running" or "getting along;" but he never examined its books, money, or notes; and when in town, did not, he says, do anything about "running the affairs of the bank." He testifies that the meetings of the board of directors were "simply for the purpose of electing officers and declaring dividends." He knew that the business of the bank was varied, presenting itself in different forms; that deeds of trust were taken from time to time; and that in the course of its business it was necessary to cancel such deeds. Upon cross-examination he said: "Tomlin was attending to the business of the bank from 1873 up to the time. this loan was made. When a man applied to the bank for a loan, or to have a deed of trust changed, or the security changed, my understanding was that Tomlin attended to it. I never questioned Tomlin's right to cancel a deed of trust from 1873 to 1879; never knew of any other director questioning his right during that time. * Tomlin was acting as cashier from 1865 up to the time of making this loan, and, so far as I know, was transacting generally all the business necessary to be transacted here at the bank." When asked by whom he expected a deed of trust to be canceled, when executed by one who applied to the bank for a loan, and gave other security, and wished that deed released, his answer was: “I expected Tomlin attended to it.” When asked whom he supposed had such authority from 1873 to the time of the loan in question, his answer was: "I understood he [Tomlin] was doing it. I never thought much of it, and knew nothing about his authority." Again, the same witness: "My understanding is that Tomlin was doing the business of the bank. Cannot say when it was I first heard of this loan. When I heard it I did not do anything." Hemry, the other director, and who was elected president of the bank for 1879, said that he did not, nor did any individual director, to his knowledge, give orders as to the release of securities. "To be very particular," said he, "I don't think of any particular case in which I directed or advised." It thus appears that from 1873 up to 1880, during McFerran's absence in Colorado, there could have been no supervision of the business by him, and that the local directors surrendered all control to the cashier, who was their co-director. If they did not abdi |