National Bank v. Fridenberg

Opinion by Mr. Justice Mestbezat, The plaintiff’s bill was properly dismissed on the facts found and stated in the two opinions filed by the learned trial judge. The bill avers and it is conceded that the defendants, who were brokers, doing business in the city of Philadelphia, were employed by Mory to buy and sell securities for the plaintiff bank. The account was opened in July, 1900, in the name of “ The National Bank of Boyertown ” and ran till October, 1901. The defendants had a previous individual account with Mory, but it was closed more than a year prior to the opening of the account with the bank. It is not denied that Mory had authority to purchase and sell stocks and bonds for the bank. It is found as a fact that the bank authorized the cashier to speculate in stocks without any limitation as to the manner of doing so and that it received large sums as the result of fortunate speculations during the running of this account. After Mory, the cashier, had absconded in October, 1901, the president of the bank received from the defendants securities aggregating $165,000 and ordered the brokers to sell all the remaining stocks and bonds held by them for the plaintiff, which was done, and the balance due the bank on the account was remitted to it. An itemized account of all the stock transactions between the plaintiff and the defendants was furnished by the latter to the bank prior to the filing of this bill. The defendants had no private account with Mory, but all their dealings with him subsequent to July 19, 1900, were for and in the name of the bank. There was but one account of these transactions kept by the defendants and it contained all the securities purchased and sold through Mory from July 19, 1900, when the account was opened, until it was closed in October, 1901. This bill was filed for an accounting and to compel the de [247] fendants to deliver to the plaintiff bank any securities that might be found owing it. It is claimed by the plaintiff that the account should include only such securities as were purchased and sold for cash and should exclude all stocks and bonds not paid for in full at the time of the purchase. The former transactions are alleged to be legitimate and the latter, speculative and on Mory’s individual account. The plaintiff has accordingly made two accounts from the account furnished it by defendants, the only account kept by them, and annexed the two accounts to its bill: one containing the transactions admitted to be legitimate and carried on by Mory for the bank, and the other alleged to be speculative and containing transactions carried on for the private account of Mory. It is averred that these accounts were “ wrongfully merged into one account ” by the defendants. But there is no sufficient evidence to sustain this averment or to warrant the conclusion that the defendants knew the purchase and sales of any of the securities were on Mory’s individual account. The defendants had no reason to believe that the bank had confined Mory to cash transactions in his stock dealings on its account. The authority of the cashier in the matter was apparently general and without limitation as to the character and amount of the securities he was empowered to purchase, and as to whether the transactions should be on margin or for cash. Even if the financial standing of Mory had been discredited in the conversation between Wallick and the defendants, proof of which was rejected, it afforded no reason for the latter believing Mory was not authorized to act for the bank in all of the -stock transactions subsequent to the date the account had been opened when it is conceded he had the authority to purchase and sell stocks for cash througli the defendants as brokers. Ilis standing for honesty and integrity was vouched for by the bank by its employing him as its cashier. His financial condition might be a reason for the defendants refusing to deal with him on his individual account, but it was no evidence of a limitation of his authority to act for a bank of which he was cashier and which admitted his authority to deal for it in securities. We think the plaintiff must accept the account as a whole and that there is no reason shown by the evidence for excluding the transactions involving the losses. As said by the learned [248] judge: “ There is no equity in the division of what was one account, as far as the defendants were concerned, into two, and thus pocket the profits of one kind of transactions and cast upon the defendants, not the loss of others, but the failure to make more profits than it would have made if certain other transactions had not taken place.” The decree is affirmed.