L'HERBETTE v. PITTSFIELD NATIONAL BANK.

[162 MASSACHUSETTS, 137.]

BANKS, LIABILITY OF FOR ACTS OF CASHIER.-If moneys are deposited with one acting as cashier of a bank, and are received by him in that capacity, and not individually, with an agreement that they shall draw interest and shall be invested by the bank in stocks and bonds for the depositor, and it did not actually receive the moneys from its cashier, it is answerable for such moneys, though he had no authority to agree to pay interest nor to stipulate for the investment of the moneys in stocks or bonds. The fact that the depositor cannot enforce these agreements does not deprive him of his right to recover back the moneys without interest, no investment having been made by the bank or its cashier.

BANKS. THE FACT THAT THE CASHIER OF A BANK, AFTER RECEIVING MONEYS DEPOSITED, MADE AN INVALID AGREEMENT that the bank should pay interest or should invest for the benefit of the depositor does not exonerate it from liability to refund the money without interest, no investment having been made.

BANKS. AN INSTRUCTION TO A JURY THAT "IF THE DIRECTORS, THROUGH INATTENTION or otherwise, suffered the cashier to pursue and practice a certain line of conduct for a considerable period of time, without objection, the bank will be bound by his acts within that line of conduct," does not afford any just ground of exception in an action against the bank to recover moneys deposited with its cashier acting in that capacity, under an agreement that the bank would pay interest and would invest such moneys in stocks and bonds for the depositor. BANKS

EVIDENCE.-AN ENVELOPE USED AND DELIVERED BY A CASHIER to a bank as a statement of plaintiff's account in the bank, and also containing entries of sums paid in and withdrawn from time to time, is admissible in an action against the bank as a statement by its proper officer made at the time of the actual transactions of sums received and paid out.

BANKS EVIDENCE.-UPON THE QUESTION WHETHER THE PLAINTIFF WAS DEALING WITH THE CASHIER of the bank as an individual or in his capacity as an officer of the bank, former transactions of a similar character are competent evidence.

DEPOSITIONS.-IF A WITNESS WHOSE TESTIMONY IS TAKEN OUT OF THE STATE ANNEXES TO HIS DEPOSITION COPIES OF PAPERS instead of the originals, the court in its discretion may allow them to be read in evidence.

BANKS EVIDENCE.-AN EXHIBIT SHOWING THE RECEIPT OF THREE SHARES OF STOCK in the name of the plaintiff is competent as tending to prove that the plaintiff's former dealings were with the bank instead of with the cashier as an individual.

BANKS EVIDENCE.-TESTIMONY THAT THE BANK HAD ACCOUNTS WITH BROKERS who bought stocks for its customers, and that its books of account with such brokers showed the purchase of stock, certificates of which were taken in plaintiff's name by the direction of the bank, is admissible to prove that it was in the habit of acting for its customers in the purchase of stocks, and that the former dealings of the plaintiff were with such bank, and not with its cashier as an individual

BANKS. EVIDENCE THAT THE DEFENDANT DID NOT ENTER PLAINTIFF'S NAME ON ITS BOOKS AS A DEPOSITOR is not admissible as tending to prove that a transaction had by the plaintiff with the cashier was in his individual capacity, and did not bind the bank.

ACTION to recover for money deposited by plaintiff with the defendant bank. The verdict of the jury was for the plaintiff, whereupon the defendant alleged exceptions.

J. C. Crosby and J. F. Noxon, for the defendant.

T. P. Pingree & C. E. Burke, for the plaintiff.

138 ALLEN, J. At the trial the issue was clearly defined whether the money was paid to Francis, the defendant's cashier, in his individual capacity, to be used by him individually for the plaintiff, or whether it was paid to him as cashier of the bank, and as and for a deposit in the bank. According to the findings of the jury, the plaintiff deposited his money with Francis, acting as cashier of the defendant bank, and Francis received the same acting in that capacity, and not in his individual capacity. An agreement was made that the money should draw interest, but there was no usage of the bank authorizing the cashier to allow interest on deposits, and the jury allowed none in their verdict. The defendant bank did not actually receive 109 the money from the cashier. The deposits were upon the distinct understanding and agreement with Francis, as cashier, that the same should be invested by the bank in stocks and bonds for the plaintiff.

The scope of the last finding is not clearly defined, but it has not been assumed by counsel on either side that the money was to be invested by the bank at its mere discretion, and without previous directions from or the assent of the plaintiff. The argument for the defendant is that national banks have no authority to deal in stocks or bonds, or to act as brokers or agents for others in the purchase of them; and also that an agreement by the cashier that deposits should draw interest was beyond his authority, and not binding upon the defendant.

Let these positions of the defendant be assumed, without discussion, to be correct. Assume, also, that the plaintiff was bound to take notice of the limitation of the power of the bank, and of the authority of the cashier in these respects. It follows certainly that he could not enforce these agreements, but it does not follow that he could not recover back his

money without interest, no investment of it having been. made for him by the bank or by the cashier.

There is no doubt that the cashier was a proper officer of the bank to receive deposits of money at the bank in its behalf (Morse on Banking, sec. 161), and there was nothing criminal or immoral in either of the agreements made by him. If those agreements were invalid because ultra vires or unauthorized, there certainly would be no reason why the bank should not be held to refund to the plaintiff his money on demand, provided the bank had actually received it. The fact of the cashier's making the invalid agreements at the time of receiving the deposits would not entitle the bank to retain the money for its own use, or debar the plaintiff from recov ering it back.

Nor does the fact that the money, by reason of the cashier's misappropriation of it, did not actually come to the use of the bank, make any difference. The dealing between the plaintiff and the cashier was at the bank, and it was on the footing that in receiving the money the cashier represented the bank. The money was paid and received as and for money deposited in the bank. Suppose that no agreement as to the future investment 140 of the money had been made, it could hardly be doubted that the money paid at the bank to the cashier, as and for a deposit in the bank, and accepted by him as such, would be treated as having been received by the bank, even though the cashier should embezzle it. The agreement was that the money should be invested by the bank; not that it should be invested by Francis. The making of this agreement does not impair the obligation which rests upon the bank by reason of the deposit of the money with its cashier. The bank is bound because its cashier, assuming to act in its behalf, received the plaintiff's money as money deposited in the bank; and the fact of his making invalid agreements, if his agreements were invalid, that the bank should at some time in the future invest the money for the plaintiff, and meanwhile should allow him interest upon it, does not have the effect to exonerate the bank from its liability to refund the money without interest to the plaintiff on demand, no investment thereof having been made by it: White v. Franklin Bank, 22 Pick. 181; Atlas Bank v. Nahant Bank, 3 Met. 581, 585-588; Dill v. Wareham, 7 Met. 438; Morville v. American Tract Society, 123 Mass. 129, 137, 138: 25 Am. Rep. 40; Davis v. Old Colony R. R. Co., 131 Mass.

258, 275; 41 Am. Rep. 221; Logan County Nat. Bank v. Townsend, 139 U. S. 67, 74; Spring Co. v. Knowlton, 103 U. S. 49; Hitchcock v. Galveston, 96 U. S. 341, 350; East River Nat. Bank v. Gove, 57 N. Y. 597, 601; Ziegler v. First Nat. Bank, 93 Pa. St. 393; First Nat. Bank of Monmouth v. Brooks, 3. Browne's National Bank Cases, 387; Thompson v. Bell, 10 Ex. 10.

The defendant excepted to the statement by the court that, "If the directors, through inattention or otherwise, suffered the cashier to pursue and practice a certain line of conduct for a considerable period of time without objection, the bank will be bound by his acts within that line of conduct." It is not necessary for us to hold that this would be correct as a universal proposition. The defendant's argument upon it is that the bank would not be bound because of the cashier's agreement as to investing the money; and the only significance of the instruction was that the bank would be bound, if the directors suffered the cashier to receive money from depositors with an agreement that the same should be invested by the bank in stocks and 141 bonds. The instruction must be considered with reference to the aspect of the case to which it was applicable. So considered, it was right. Beyond this we need not go till the question actually arises. The defendant also relies on certain exceptions in matters of evidence.

1. As to the envelope. According to the testimony of the plaintiff and his daughter, this was used and delivered to the plaintiff by the cashier as a statement of the plaintiff's account in the bank, in like manner as an ordinary bankbook is generally used and delivered. Money was sent by the plaintiff at different times, with slips or tickets addressed to the defendant bank, in substance like ordinary slips or tickets accompanying deposits; and the money was withdrawn on orders addressed to the defendant bank, resembling ordinary checks. The sums so paid in and so withdrawn were entered by the cashier on this envelope, and the entry in one instance was verified by his initials, thus: "E. S. F., Cas." There was a statement that interest was to be paid at the rate of four per cent, but no minute of the agreement to invest the money in the future. This envelope was competent as the statement by the proper officer of the bank, made at the time of actual transactions, of the sums received and paid out. There can be no doubt that an ordinary bank

book is competent against a bank for the purpose of showing the state of a depositor's account. This envelope was admissible in like manner: Morse on Banking, sec. 103.

2. On the question whether the plaintiff was dealing with Francis as an individual, or with him as an officer of the defendant bank, the former transactions were competent, being similar in kind.

3. Although the deponent Parmly, who was out of the state, annexed copies instead of the originals of papers to his deposition, the court in its discretion might allow them to be read: Binney v. Russell, 109 Mass. 55; Williamson v. Cambridge R. R. Co., 144 Mass. 148.

4. Exhibit 19 was competent as tending to show that the plaintiff's former dealings were with the defendant bank. 142 According to Jackson's testimony his firm (Lee, Higginson, and Company) bought the shares in question for the defendant bank, taking the certificate in the plaintiff's name; and his firm had had an open account with the defendant bank for several years.

5. The testimony of Willis D. Smith was competent, as tending to show not only that the defendant was in the habit of acting for its customers in the purchase of stock through brokers in Boston and New York, but also that the former dealings, of the plaintiff were with the bank, and that the bank kept on its book accounts with the two firms of brokers who on former occasions had bought for the bank the shares for which certificates were by its direction taken in the plaintiff's name.

6. Testimony to show that the defendant did not enter on its books the plaintiff's name as a depositor had no legiti mate tendency to show that the plaintiff's transactions were not with the bank. This would at most be an implied denial by the defendant of its liability, in the absence of the plaintiff, who cannot be affected by its omission to make entries on its books: Sanborn v. Fireman's Ins. Co., 16 Gray, 448, 455; 77 Am. Dec. 419; Morse v. Potter, 4 Gray, 292, 293.

It is now contended that this evidence was competent, as tending to show that the bank never received the benefit of the plaintiff's money. Whether this was so or not, the jury found this fact in favor of the defendant, and no exception can now be sustained on this ground to the exclusion of the evidence.

7. The question to the witness Charles C. Francis, who