(40 Sup.Ct.) Brown v. Elliott and Moore v. Elliott, 225 U. S. 392, 32 Sup. Ct. 812, 56 L. Ed. 1136; Henry v. Henkel, 235 U. S. 219, 35 Sup. Ct. 54, 59 L. Ed. 203. tent to enlist in the service of a foreign people, | Ct. 793, 56 L. Ed. 1114, Ann. Cas. 1914A, 614; uses "retain" as an alternative to "hire," and as meaning something different from the usual employment with payment in money; and one may be retained, in the sense of engaged, to render a service by a verbal promise, and by a prospect for advancement or payment in the future. [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Retain.] Appeal from and in Error to the District Court of the United States for the Southern District of New York. Habeas corpus by Roberto Gayon against Thomas D. McCarthy, United States Marshal for the Southern District of New York, and another. The writ was discharged, and petitioner appeals and brings error. Affirmed. Mr. Wm. S. Bennet, of New York City, for appellant and plaintiff in error. Mr. Assistant Attorney General Stewart, for appellee and defendant in error. Mr. Justice CLARKE delivered the opinion of the Court. The appellant, Gayon, was indicted in the Southern district of Texas for conspiring (section 37 of the Criminal Code [Comp. St. § 10201]) with one Naranjo, of San Antonio, Texas, and with one Mendoza, of Laredo, Texas, about January 1, 1919, to hire and retain Foster Averitt, a citizen of the United States, to go to Mexico, there to enlist in military forces organized in the interest of Felix Diaz, then in revolt against the government of Mexico, with which the United *172 *States was at peace, in violation of section 10 of the Criminal Code, as amended May 7, 1917, 40 Stat. 39, chapter 11 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 10174). Gayon was arrested in New York, and, after a full hearing before a commissioner of the United States, was held subject to the order of the District Court for his removal to Texas. Thereupon, by petition for writs of habeas corpus and certiorari, the case was removed to the District Court for the Southern District of New York, and, upon a hearing on a transcript of the evidence before the commissioner, that court discharged the writ of habeas corpus and entered an order that a warrant issue for the removal of the appellant to Texas. An appeal brings this order here for review. The principles and practice applicable to this case are abundantly settled. Greene v. Henkel, 183 U. S. 249, 261, 22 Sup. Ct. 218, 46 L. Ed. 177; Beavers v. Haubert, 198 U. S. 77, 24 Sup. Ct. 605, 48 L. Ed. 882; Hyde v. Shine, 199 U. S. 62, 84, 25 Sup. Ct. 760, 50 L. Ed. 90; Tinsley v. Treat, 205 U. S. 20, 27 Sup. Ct. 430, 51 L. Ed. 689; Haas v. Henkel, 216 U. S. 462, 475, 30 Sup. Ct. 249, 54 L. Ed. 569, 17 Ann. Cas. 1112; Price v. Henkel, 216 U. S. 488, 490, 30 Sup. Ct. 257, 54 L. Ed. 581; Hyde v. United States, 225 U. S. 347, 32 Sup. Of many errors assigned only two are argued, viz: That the court erred in holding: (1) That the acts committed by the appellant "of which there was any evidence before the commissioner" constituted a crime under section 10 of the Penal Code, and (2) that the evidence before the commissioner showed probable cause for believing the defendant guilty of the crime charged in the indictment. By these assignments of error the correct rule of decision is recognized, that if there was before the commissioner or District Court evidence showing probable cause for believing the defendant guilty of having conspired with Naranjo or Mendoza, when either was in the Southern district of Texas, to hire or retain Averitt to go to Mexico to enlist in the insurgent forces operating under General Diaz against the Mexican government, the order of the District Court must be affirmed. *173 *The evidence before the commissioner, carried to the District Court, may be summar ized as follows: [1] The government introduced the indictment and, with the admission by Gayon that he was the person named therein, rested. This established a prima facie case in the absence of other evidence. Tinsley v. Treat, 205 U. S. 20, 31, 27 Sup. Ct. 430, 51 L. Ed. 689, and cases cited. [2] Thereupon the testimony of the accused and of one Del Villar was introduced by appellant, and that of Averitt by the government, which we condense into narrative form: For five years before the arrest, Del Villar, a political exile from Mexico, had maintained offices in New York, from which he had conducted a systematic propaganda in the interest of Felix Diaz and against the Mexican government. The accused, Gayon, is a Mexican citizen, and during several administrations prior to that of Carranza had served as consul for the Mexican government at Roma, Texas, and at other places within and without the United States. For about two years he had been secretary to Del Villar and for some time prior to his arrest was in the joint service and pay of Del Villar and General Aurelio Blanquet, the latter then in Mexico serving with the forces of Diaz. Naranjo was editor and publisher of a newspaper at San Antonio, Texas, called "Revista Mexicana" (Mexican Review), which was opposed to the established Mexican government and favorable to the revolutionists operating in the interest of Diaz. On December 12, 1918, Gayon wrote from New York to Naranjo at San Antonio to secure an advertisement in the Review for "my work 'El General Blanquet,'" saying, "There #174 The letter which he gave to Averitt addressed to General Blanquet opens with this paragraph: are some reasons that you may know in the [ Gayon introduced him as “undertaking a trip next few days why I want a big circulation to Mexico on special mission to General Felix of the book," asking if he might send some Diaz and Aurelio Blanquet," and requested that he "supply him the necessary informacopies to be sold at the newspaper *office, and tion to enable him to make his trip as quickly concluding, "I will await your letters hoping as possible." to give you good news in my next letter." On December 23, 1918, Gayon wrote Naranjo, addressing him as "My dear Friend," and saying that he had received his letter of the 18th instant. In this letter a discussion of the sale of his book "El General Blanquet" is followed by comment on the activities of other persons, in which he discourages new projects and urges joining "with the National Union Committees," which he states had already passed the embryonic state and now constitute a reality. He concludes: "God grant us, now that we are on the threshold of success, we may leave aside our obstinate custom of projecting, and go ahead to produce results exclusively." On January 14, and again on January 21, 1919, he addressed Naranjo as "My dear Friend" and discussed further advertising and circulating of his book. This correspondence makes it clear enough that Gayon, although in New York, in December, 1918, and January, 1919, was in close as sociation with Naranjo, and that the two were actively engaged in promoting opposition to the established Mexican government. On January 5, 1919, Foster Averitt, an American citizen, whose home was in Texas, called at the office of Gayon, and what passed between them is derived from the testimony of the two, as follows: Averitt had recently resigned from the United States Naval Academy at Annapolis and, being without employment, says that he called at the office of Gayon, for the purpose of securing, if possible, a position in Mexico or Central America as an engineer. He was wearing his uniform as midshipman of the United States Navy and he first showed Gayon some official papers, which the latter did not read, and then said that he was of the United States Navy, and that he must go at once to Mexico to see Generals Diaz and #175 Blanquet personally. He did not give any reason for desiring to see these men but asked for letters of introduction to them, which Gayon refused until he could confer with Del Villar. Averitt returned the next day and, after discussing with Gayon conditions in Mexico, the location of the several armed forces near the border, and whether he should go by sea to Vera Cruz or overland, he again left for the day. On returning the next day he received from Gayon two letters, one addressed to Naranjo, at San Antonio, and one to "General Aurelio Blanquet, General Headquarters, Mexico." Gayon had no knowledge of or acquaintance with Averitt before his first call at his office and he did not present any letters of introduction, but in the letter to Naranjo we Guard of the United States, will inform you "The bearer, Mr. Foster Averitt, Marine about the reasons for his trip and of the work are undertaking here. I kindly request from you, after meeting Mr. Foster [sic], to be good enough to introduce him to General Felix Diaz, as he wants to take up some matters with both of you." The remainder of the letter explains how he had given publicity to "the recent successful arrival" of the general in Mexico and the motives inspiring the movement of reorganization under the leadership of General Diaz. It predicts early recognition by our government of the belligerency of the Diaz insurgents and urges the general to write as often as possible to enable "us to continue our campaign of propaganda." *176 Supplied with these letters, Averitt straightway went to San Antonio and presented his letter to Naranjo, who, *after some conferences with him, gave him a letter to General Santiago Mendoza, at Laredo, on the border. This letter was presented to Mendoza and through him arrangements were made for Averitt's crossing into Mexico with two or three others, but they were arrested by customs guards and the proceedings we are considering followed. In the interviews in New York there was suggestion of payment of expenses and a commission for Averitt, but Gayon, saying that the furnishing of either would violate the neutrality laws of the United States, told him there would be no difficulty in his getting a commission from General Blanquet on his arrival in Mexico and the last thing he said to him when leaving was "that he expected that he should be at least a colonel when he saw him again down there." He told him it might be possible to have his expenses made up to him when he arrived in Mexico, and, as a matter of fact, he received $15 from General Mendoza at Laredo. The statute which Gayon is charged with violating provides: (40 Sup.Ct.) promised Averitt that upon his arrival in Mexico he would be given a commission in the army of General Blanquet; that at the same time he delivered to Averitt a letter addressed to General Blanquet, who was then in Mexico in command of revolutionary forces; that Averitt visited and held conferences with Naranjo, who gave him a letter to Mendoza, at Laredo, in the Southern district of *177 *Texas; and that Averitt, under instructions received from Naranjo, called upon and conferred with Mendoza at Laredo and with him arranged to enter Mexico with others, with intent to join the forces of Diaz under General Blanquet. While the narration of what took place between Gayon and Averitt does not show a hiring of the latter in the ordinary sense of the word, yet, when taken with the conduct of Averitt in going immediately to Texas, and in attempting to cross into Mexico, plainly, it tends to show that Gayon retained Averitt in the sense of engaging him to go to Mexico, that he was induced to enter into that engagement by the promise that he would be given a commission in the forces of Diaz when he arrived there and that he would probably be reimbursed for his expenses. [3] There was also evidence tending to show that by communication and concerted action between Gayon, Naranjo and Mendoza, Averitt was induced to go from New York to the border and would have succeeded in reaching Mexico and joining the insurgent forces but for the vigilance of the United States officers who arrested him. The evidence also is that Mendoza conferred with Averitt and acted in promotion of the conspiracy when in the Southern district of Texas, thus establishing the jurisdiction of the court to which the indictment was returned, under Hyde and Schneider v. United States, 225 U. S. 347, 32 Sup. Ct. 793, 56 L. Ed. 1114, Ann. Cas. 1914A, 614, and Brown v. Elliott and Moore v. Elliott, 225 U. S. 392, 32 Sup. Ct. 812, 56 L. Ed. 1136. This discussion of the record makes it sufficiently clear that there was substantial evidence before the commissioner and the court tending to show that section 10 of the Criminal Code had been violated and that there were was probable cause for believing the appellant guilty of conspiring with Naranjo and Mendoza to compass that violation, as charged in the indictment, and therefore the order of the District Court must be Affirmed. (251 U. S. 524) BATES v. DRESSER. DRESSER v. BATES. (Argued Jan. 19 and 20, 1920. Decided Nos. 155-158. 1. BANKS AND BANKING 253-DIRECTORS NOT GUILTY OF ACTIONABLE NEGLIGENCE IN FAILING TO DISCOVER BOOKKEEPER'S THEFT. Where the bookkeeper of a national bank stole a great part of its assets, concealing his thefts by overcharging depositors and thus re ducing the apparent liabilities of the bank, the charged them with liability for the losses by acdirectors held not guilty of such negligence as cepting the cashier's statements of liabilities and failing to inspect the depositors' ledger, although a by-law required the appointment of a committee every six months to count the cash and compare its assets and liabilities with the balances on the general ledger. 2. BANKS AND BANKING 253-PRESIDENT OF NATIONAL BANK GUILTY OF NEGLIGENCE IN FAILING ΤΟ DISCOVER BOOKKEEPER'S THEFT. Where the bookkeeper of a national bank stole a great part of its assets concealing his thefts by overcharging depositors, the president of the bank held guilty of negligence making him liable for the bank's losses where he had knowledge of unexplained shortages, the disappearance of a package left for safe-keeping, the seeming rapid decline in deposits, and suspicious circumstances regarding the bookkeeper's con duct. [4] The word "retain" is used in the statute as an alternative to "hire" and means something different from the usual employment with payment in money. One may be retained, in the sense of engaged, to render 3. BANKS AND BANKING 254-INTEREST ON a service as effectively by a verbal as by a written promise, by a prospect for advancement or payment in the future as by the immediate payment of cash. As stated long ago by a noted Attorney General, in an opinion dealing with this statute: *178 *"A party may be retained by verbal promise or invitation for a declared or known purpose. If such a statute could be evaded or set at naught by elaborate contrivances to engage without enlisting, to retain without hire, to invite without recruiting, * * it would be idle to pass acts of Congress for the punishment of this or any other offenses." Opinions of the Attorney General, vol. 7, pp. 367, 378, 379. AMOUNT RECOVERABLE FROM OFFICER FOR NEGLIGENCE IS A MATTER OF DISCRETION. Whether interest should be charged on the tional bank for negligence is a question of disamount recovered from the president of a nacretion, and not of right. RECOVERY 4. INTEREST 53-ALLOWED, ON In an action against the president of a national bank for negligence, where a judgment in favor of plaintiff, the receiver of the bank, was reduced by the Circuit Court of Appeals, and the receiver appealed, interest is properly allowed, to the extent that the decree of the District Court was affirmed, to the time the For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes receiver interposed a delay by taking his ap-reported that the daily balance book was peal. very much behind, that it was impossible to *527 Mr. Justice McKenna and Mr. Justice Pitney dissenting. Appeals from the United States Circuit Court of Appeals for the First Circuit. Suit by John L. Bates, receiver of the National City Bank of Cambridge, Mass., against Sumner Dresser, administrator of Edwin Dresser, deceased, and others. From a decree of the Circuit Court of Appeals (250 Fed. 525, 162 C. C. A. 541), reversing a decree of the District Court (229 Fed. 772), and dismissing the bill as against some of the defendants, the receiver and certain defendants appeal. Modified and affirmed. *prove the deposits, and that a competent bookkeeper should be employed upon the work immediately. Coleman kept the deposit ledger and this was the work that fell into his hands. There was no cage in the bank, and in 1904 and 1905 there were some small shortages in the accounts of three successive tellers that were not accounted for, and the last of them, Cutting, was asked by Dresser to resign on that ground. Before doing so he told Dresser that someone had taken the money and that if he might be allowed to stay he would set a trap and catch the man, but Dresser did not care to do that and thought that there was nothing wrong. From Cutting's resignation on October 7, 1905, Coleman acted as paying and receiving teller, in addition to his other duty, until November, 1907. During this time there were no shortages disclosed in the teller's accounts. In May, 1906, Coleman took $2,000 cash from the vaults of the bank, but restored it the next morning. In November of the same year he began the thefts that come into question here. Perhaps in the beginning he took the money directly. But as he ceased to Mr. Justice HOLMES delivered the opinion have charge of the cash in November, 1907, of the Court. he invented another way. Having a small This is a bill in equity brought by the re- account at the bank, he would draw checks ceiver of a national bank to charge its for- for the amount he wanted, exchange checks mer president and directors with the loss of with a Boston broker, get cash for the broa great part of its assets through the thefts ker's check, and, when his own check came of an employé of the bank while they were to the bank through the clearing house, would in power. The case was sent to a master abstract it from the envelope, enter the others who found for the defendants; but the Dis- on his book and conceal the difference by a trict Court entered a decree against all of charge to some other account or a false adthem. 229 Fed. 772. The Circuit Court of dition in the column of drafts or deposits in Appeals reversed this decree, dismissed the the depositors' ledger. He handed to the bill as against all except the administrator | cashier only the slip from the clearing house of Edwin Dresser, the president, cut down the amount with which he was charged1 and refused to add interest from the date of the decree of the District Court. Dresser v. Bates, 250 Fed. 525, 162 C. C. A. 541. Dresser's administrator and the receiver both appeal, the latter contending that the decree of the District Court should be affirmed with interest and costs. The bank was a little bank at Cambridge with a capital of $100,000 and average deposits of somewhere about $300,000. It had a cashier, a bookkeeper, a teller and a messenger. Before and during the time of the losses Dresser was its president and executive officer, a large stockholder, with an inactive deposit of from $35,000 to $50,000. From July, 1903, to the end, Frank L. Earl was cashier. Coleman, who made the trouble, entered the service of the bank as messenger in September, 1903. In January, 1904, he was promoted to be bookkeeper, being then not quite eighteen but having studied bookkeeping. In the previous August an auditor employed on the retirement of a cashier had To $264,088.02. that showed the totals. The cashier paid whatever appeared to be due and thus Coleman's checks were honored. So far as Coleman thought it necessary, in view of the absolute trust in him on the part of all concerned, he took care that his balances should agree with those in the cashier's book. 528 *By May 1, 1907, Coleman had abstracted $17,000, concealing the fact by false additions in the column of total checks, and false balances in the deposit ledger. Then for the moment a safer concealment was effected by charging the whole to Dresser's account. Coleman adopted this method when a bank examiner was expected. Of course when the fraud was disguised by overcharging a depositor it could not be discovered except by calling in the passbooks, or taking all the deposit slips and comparing them with the depositors' ledger in detail. 1907, the amount taken by Coleman was By November, $30,100, and the charge on Dresser's account was $20,000. In 1908 the sum was raised from $33,000 to $49,671. In 1909 Coleman's activity began to increase. In January he (40 Sup.Ct.) *530 took $6,829.26; in March, $10,833.73; in [ can be held. This fraud was a novelty in June, his previous stealings amounting to the way of swindling a bank so far as the $83,390.94, he took $5,152.06; in July, $18,050; knowledge of any experience had reached in August, $6,250; in September, $17,350; | Cambridge before 1910. We are not prepared in October, $47,277.08; in November, $51,847; to reverse the finding of the master and the in December, $46,956.44; in January, 1910, Circuit Court of Appeals that the directors $27,395.53; in February, $6,473.97; making should not be held answerable for taking a total of $310,143.02, when the bank closed the cashier's statement of liabilities to be on February 21, 1910. As a result of this the amount of the monthly deposits seemed to decline noticeably and the directors considered the matter in September, but concluded that the falling off was due in part to the springing up of rivals, whose deposits were increasing, but was parallel to a similar decrease in New York. An examination by a bank examiner in December, 1909, disclosed nothing wrong to him. as correct as the *statement of assets always was. If he had not been negligent without their knowledge it would have been. Their confidence seemed warranted by the semiannual examinations by the Government examiner and they were encouraged in their belief that all was well by the president, whose responsibility, as executive officer; interest, as large stockholder and depositor; In this connection it should be mentioned and knowledge, from long daily presence in that in the previous semi-annual examina- the bank, were greater than theirs. They tions by national bank examiners nothing discovered pointing to malfeasance. The cashier was honest and everybody believed that they could rely upon him, although in fact he relied too much upon Coleman, who also was unsuspected by all. had opened the envelopes from the clearing house, and had seen the checks, or had ex was *529 If Earl amined the deposit *ledger with any care he would have found out what was going on. The scrutiny of anyone accustomed to such details would have discovered the false additions and other indicia of fraud that were on the face of the book. But it may be doubted whether anything less than a continuous pursuit of the figures through pages would have done so except by a lucky chance. [1] The question of the liability of the directors in this case is the question whether they neglected their duty by accepting the cashier's statement of liabilities and failing to inspect the depositors' ledger. The statements of assets always were correct. A bylaw that had been allowed to become obsolete or nearly so is invoked as establishing their own standard of conduct. By that a committee was to be appointed every six months "to examine into the affairs of the bank, to count its cash, and compare its assets and liabilities with the balances on the general ledger, for the purpose of ascertaining whether or not the books are correctly kept, and the condition of the bank in a sound and solvent condition." Of course liabilities as well as assets must be known to know the -condition and, as this case shows, peculations may be concealed as well by a false understatement of liabilities as by a false show of assets. But the former is not the direction in which fraud would have been looked for, especially on the part of one who at the time of his principal abstractions was not in contact with the funds. A debtor hardly expects to have his liability understated. Some animals must have given at least one exhibition of dangerous propensities before the owner were not bound by virtue of the office gratuItously assumed by them to call in the pass books and compare them with the ledger, and until the event showed the possibility they hardly could have seen that their failure to look at the ledger opened a way to fraud. See Briggs v. Spaulding, 141 U. S. 132, 11 Sup. Ct. 924, 35 L. Ed. 662; Warner v. Penoyer, 91 Fed. 587, 33 C. C. A. 222, 44 L. R. A. 761. We are not laying down general principles, however, but confine our decision to the circumstances of the particular case. [2] The position of the president is different. Practically he was the master of the situation. He was daily at the bank for hours, he had the deposit ledger in his hands at times and might have had it at any time. He had had hints and warnings in addition to those that we have mentioned, warnings that should not be magnified unduly, but still that taken with the auditor's report of 1903, the unexplained shortages, the suggestion of the teller, Cutting, in 1905, and the final seeming rapid decline in deposits, would have induced scrutiny but for an invincible repose upon the status quo. In 1908 one Fillmore learned that a package containing $150 left with the bank for safe keeping was not to be found, told Dresser of the loss, wrote to him that he could but conclude that the package had been destroyed or removed by someone connected with the bank, and in later conversation said that it was evident that there was a thief in the bank. He added that he would advise the president to look after Coleman, that he believed he was living *531 at a pretty fast pace, and that he *had pretty good authority for thinking that he was supporting a woman. In the same year or the year before, Coleman, whose pay was never more than twelve dollars a week, set up an automobile, as was known to Dresser and commented on unfavorably, to him. There was also some evidence of notice to Dresser that Coleman was dealing in copper stocks. In 1909 came the great and inadequately explained seeming shrinkage in the |