Franklin Bank v. Byram

AppletoN, J. — The evidence tends satisfactorily to show that the defendant has in his hands the funds of the Franklin Bank, which its cashier permitted him to overdraw. It is insisted that such overdrawing is a loan, and as such within the prohibition of R. S., c. 77, § 19, which forbids any bank to make any discounts without at least two responsible names as principals, sureties or indorsers, and that no action can be maintained for any funds of the bank which may be proved to be in the defendant’s hands or to have been paid on his check. But this cannot be regarded as correct. It is no part of the duty of the cashier to make discounts. The loans of the bank are to be effected through the agency of its directors. No loan is shown to have been made by the bank; no discount by its directors within any meaning which can be properly given to either the word loan or discount. This case is not therefore within the provisions of § 19. The declaration contains the money counts, on which the plaintiff seeks to recover what is equitably due. If the cashier, without authority, misappropriates the funds of the bank; if he violates his trust; if he pay away money wrongfully and that money can be traced into the hands of one conusant of his breach of trust and participant in his wrongdoings, it is difficult to perceive why redress should be denied the bank. In this view, it is immaterial whether it is [491] paid out on a check or not. If the drawer of the check has no funds, the cashier is under no greater obligation to pay than if it were a mere verbal request. The overdrawing and the payment of the check overdrawn are both wrongful acts. If in such case the money of a bank has been misappropriated by its cashier, without the knowledge or consent of its officers, there is neither law nor equity in permitting the recipient to retain what he has received without right. The plaintiff may consequently recover the amount shown to have been overdrawn. The authorities cited by the learned counsel for the defendant upon examination fail to sustain the position upon which the defence rests. In Hacker v. Anderson, 21 Wend. 372, it was held that an action cannot be maintained on a bank check, against the drawer, until after notice of presentment and non-payment, and that a check is in effect and form a bill of exchange. As between the immediate parties to a bill, the consideration may be inquired into, and it may be shown that nothing was due when the acceptance was given, or that it was in whole or in part an accommodation. So as between the parties the acceptance of a bill is presumptive evidence of funds in the hands of the acceptor. Kendall v. Galvin, 15 Maine, 131. “A check of itself,” says Woodward, J., in Lancaster Bank v. Woodward, 6 Harris, 351, “is not evidence of a debt or loan of money. The presumption is that it was given in payment of a debt and that cash was given for it at the time.” In that case no such question was raised as is here presented. “ It was attempted to prove a custom to pay overdrafts of solvent dealers with banks, but it failed, and if it had not failed such a custom should be abolished. Malus usus abolendvs estBut it is not intimated in that or in any case, that if an overdraft has been paid by the cashier, that it cannot be recovered back by the bank from the individual thus overdrawing. The defence is alike without foundation in law and in morals. According to the agreement of the parties, as the ac [492] tion is maintainable, an auditor is to be appointed, whose report is to be final, and judgment to be entered thereon. Tenney, J., being unable to be present at the argument, took no part in this decision.