First National Bank v. Hoch

Mr. Justice Mercur delivered the opinion of the court, May 5th 1879. The plaintiff in error is a national bank. This suit was against the bank, on a receipt signed by the president thereof, in the following words, to-wit: “$1000. Allentown, Dec. 18th 1875. Received of Mr. William Hoch, one thousand dollars, to be invested in bonds of the city of Allentown, bearing seven per cent, interest. Interest on the said deposit to be allowed from this date and to be accounted for on demand. W. H. Blumer, President First Nat. Bank. ” The defendant in error failing to obtain all the required bonds, or a return of the residue of the money, brought this suit. The court directed the jury to return a vprdict in his favor. It is well recognised law, that a national bank is not, by its charter, authorized to act as a broker or agent in the purchase of' bonds and stocks. Its specified powers given by statute, nor its incidental powers necessary to carry on the business of banking, do not extend to the transaction of such business: First Nat. Bank of Charlotte v. Exchange Bank, 2 Otto 122; Fowler v. Scully, 22 P. F. Smith 462. When the paper on its face shows the transaction not to be within the usual course of business of the bank, it is not binding on the bank, although signed by the president thereof, as such officer. He is the executive agent of the board of directors within the ordinary business of the bank, but cannot bind it by a contract outside thereof, without special authority. I do not understand these general rules to be denied. Some of them are expressly admitted, and the others impliedly conceded by the court below, and by the counsel for the defendant in error. The court ruled the case on the construction it gave to the receipt. The learned judge said to the jury, “ The question as to whether the plaintiff is or is not, entitled- to recover in this action, depends upon the construction that is put upon the receipt of December 18th 1875, which has been offered in evidence. It is the duty of the court to construe' this paper. If this were an obligation on the part of the bank to purchase and furnish the plaintiff with the kind of security mentioned in the paper, it would be beyond the power of the bank or its president to enter into that obligation, and the plaintiff would [328] not be entitled to recover. But I construe this paper to mean that it is an acknowledgment that the plaintiff did pay to the president of the defendant $1000, which was treated, according to the terms of the paper, as a deposit, and might be discharged by the bank, either by furnishing the bonds of the city of Allentown, or by repaying the money with interest.” It was undoubtedly the duty of the court to construe the paper; but we cannot concur in the construction given. The principal object of the contract, clearly shown by the receipt, was the purchase of bonds. That was the specific purpose for which the money was left and received. The language of the receipt assumed that the desired bonds could not then be procured, and to prevent a loss of interest in the meantime, to the defendant in error, the latter clause was added. The primary thought and main intent of the contract was a purchase of bonds. The secondary one was to procure interest until the investment could be made. While the word “ deposit” does appear in the receipt, yet it is evidently used as a synonym for money or fund. The receipt does not state that the money is left as in the case of an ordinary deposit; nor that it shall be deposited in bank to his credit; nor was it ever so deposited. It was put in the hands of the city treasurer on the very day of its receipt, presumably for the purpose of getting the city bonds. The bank never received the money. It was never subject to the check drawn by the defendant in error on the bank. Although the transaction was with Blumer, as president of the bank, yet, in all legal aspects, it was with him as an individual. Upon the uncontradicted testimony, the defendant in error was not entitled to recover. Judgment reversed.