Whitney v. First National Bank

The opinion of the court was delivered by Dunton, J. This case was before this court at the February Term, 1875, in Windham County, and was there heard with the case of Wiley v. The First National Bank of Brattleboro, 47 Vt. 546, the same questions being involved in both cases. Upon the first trial in the County Court, a verdict was directed, pro forma, for the plaintiff, and the case came to this court upon the exceptions of the defendant. The proforma judgment of the County Court was reversed, and the case remanded. It now comes into this court again upon the exceptions of the plaintiff, the court below, at the last trial, having directed a verdict for the defendant. The case as now presented is substantially the same as before. The only difference between the case as then and now before the court is this ; the plaintiff, upon the last trial in the County Court, produced several additional witnesses, whose testimony tended to prove that the cashier of the defendant bank was in the habit of receiving special deposits of United States Government bonds for safe keeping, and keeping them in the vault of the bank for the benefit of the owners or depositors, without charge to them, and that such habit, or usage, was known to the directors, and not objected to by them. The defendant is a banking corporation, incorporated pursuant to the act of Congress entitled, “ An Act to Provide a National Currency,” &c., approved June 3, 1864. It was conceded — 394 — by the learned counsel for the defendant, that if the bank had the power and authority conferred upon it by the act of Congress to become a party to the alleged contract of bailment as depositary, then by the act of its cashier in receiving and keeping the bonds in question in the manner it was done in this case, the bank became subject to the duties and liabilities of that relation to the plaintiff. This proposition was not questioned in Wiley v. Bank, supra. Wheeler, J., who delivered the opinion of the court in that case, says : “ There is no controversy, and could not probably be any, but that if the taking of these bonds to keep, as they were taken by the cashier, was within the scope of the corporate business of the bank, then the bank did become the depositary of them, and subject to the liabilities of that relation.” But we have no occasion to consider or decide this question. The court held, when this case was before them in 1875, that the acceptance of such a bailment was beyond the scope of the corporate powers of the bank, and hence the defendant was not subject to the liabilities of a depositary of the bonds in question. It therefore follows that the usage of the cashier, with the approval of the directors,, could not confer upon the bank this power. The directors are trustees of the shareholders, and their authority is limited by the act of Congress in question, to such powers as are thereby directly conferred upon them, and such, in addition thereto, as are necessarily incidental to the business of banking. Although this action is in form ex delicto, so far as it rests upon contract it is governed by the same rules as though ex contractu ; and it was so held in Wiley v. Bank, supra. The plaintiff had his choice of remedies between assumpsit and case. He chose the latter; but the negligence complained of, and for which he is seeking to recover in this suit, is an alleged breach of duty, which, it is claimed, the defendant impliedly agreed to perform by accepting the bailment, so that, if there is any liability on the part of the defendant for such breach of duty, it arises from contract. Orange Bank v. Lamb, 3 Wend. 158; Legge v. Tucker, 1 H. & N. 509; 1 Chit. Pl. (16th Am. ed.) 151; 2 Chit. Pl. (same ed.) 67; Gilson v. Spear, 38 Vt. — 395 — 355; Doran v. Smith, 49 Vt. 353. But the alleged contract of bailment on the part of the defendant was ultra vires — it imposed no duty upon the defendant as bailee. And there being no evidence tending to show a conversion of the bonds by the bank, or that the bank received auy benefit whatever from the bailment, the same question of law as to the authority of the bank to make the alleged contract by becoming the depositary of the bonds in question without charge, which is the pivotal point in this case as now presented, was decided in this same case when before the court in 1875. The fact that the cashier used the bonds deposited by the plaintiff, which were of the denomination of five hundred dollars each, and replaced them with bonds of the denomination of one thousand dollars each, was no conversion of the first-named bonds by the bank, there being no evidence that the bank either received any benefit from, or had anything to do with, making the change. Foster v. Essex Bank, 17 Mass. 479. The plaintiff also waived all objection to this action of the cashier, by taking the coupons, and treating the substituted bonds as his own, without expressing any disapproval of such action. It has been repeatedly held by this court, that when a question of law has been once decided in a case, the court will not again consider it in the same case. Stacy v. Vt. Central Railroad Co. 32 Vt. 551; Wing v. Gleason, 36 Vt. 378; Rowan v. State Bank, 45 Vt. 160. We might well stop here, and affirm the judgment of the County Court. But a very able and ingenious argument has been made by the learned counsel for the plaintiff, to show that Wiley v. Bank, supra, ought to be overruled ; and numerous cases have been cited which, it is claimed, are in conflict with it; among which are Foster v. Essex Bank, 17 Mass. 479; Coffey v. Bank, 46 Mo. 140; Leach v. Hale, 7 Am. Reports, 112, (31 Iowa); Scott v. National Bank of Chester, 72 Penn. 471; National Bank v. Graham, 79 Penn. 106; and Schley v. Chattahooche National Bank, an unreported Georgia case, not furnished us. But owing to the importance of this question to the public, we thought it — 396 — behooved us to examine the cases above cited, to which our attention was specially called in the argument for the plaintiff. The case of Foster v. Essex Bank, was ably reviewed by Wheeler, J., in Wiley v. Bank, supra, and is not in conflict with that case. The Essex Bank was incorporated by that name, with power to contract; but there was no enumeration of its powers in its charter. It always had been the practice of the bank to receive special deposits of money and other valuable property with the knowledge and approval of the directors, as was found by the special verdict of the jury. The court might, therefore, with propriety, hold as they did, that the corporation and not its officers, became the bailee of the special deposit of coin in question ; but a large portion of the same having been fraudulently taken from the bank by the cashier and converted to his own use, the bank being a mere depositary, the court also held that the bank was not liable to the depositor for the value of the coin so taken. Coffey v. Bank, was an action brought to recover a special deposit of gold which the bank had converted to its own use. No question was made as to the authority of the bank to become the bailee of special deposits of this kind, and the bank was held liable, as it should have been, for the conversion of the gold to its own use. In Leach v. Hale,,the cashier advertised that the bank would convert 7-30 United States Government bonds into 5-20 bonds without charge. The plaintiff deposited in the bank 7-30 United States bonds to be converted into 5-20 bonds, and thereafter made a demand for the return of one or the other class of bonds, which was refused. The court held that the bank was not a mere mandatary, or bailee, acting without compensation, but was liable to th_e depositor for the value of the bonds, on its refusal to deliver them on demand ; and that'the business of receiving one class of United States bonds to be converted into another, is within the scope of the powers conferred upon national banks by the act of Congress under which they are organized. The court say : “ The transaction, in the light we are now considering it, amounts to the deposit of certain securities, with an undertaking to return — 397 — those of a different class, and was within the scope of the general business of the bank.” The court omitted to find, whether, in this particular instance, the bank received compensation, although they found that generally for such business it was in some form compensated. We should also infer, although it is not stated, that the bank converted the bonds in question to its own use, which would make it liable in any event. We cannot see why converting one class of United States Government bonds into another class, at the request of the owner, is not one of the “ incidental powers ” specifically conferred upon national banks by the 8th section of the act of Congress in question, such bonds being “ evidences of debt.” In Scott v. National Bank of Chester, the court held that the bank, which was a mere depositary of United States Government bonds, without special contract or reward, and having exercised the degree of care bestowed on its own goods, was not liable for the larceny of the deposit, even by its own officers. It was assumed by the plaintiff that the bank itself was the bailee, instead of the officer receiving the bonds, and no question was made as to the authority or powers of the bank to become such bailee, by the defendant’s counsel, and the case does not show that that question was ever considered by the court. The only case we have seen in which this exact question was raised in conflict with Wiley v. Bank, is National Bank v. Graham, supra. In that case the facts are substantially the same as in the case at bar. The court held that “ the mere act of the cashier in receiving the plaintiff’s securities would not subject the bank to liability. But if the deposit was known to the directors, and they acquiesced in its retention, a contract relation was created by which the defendants should be held bound.” The court cited Foster v. Essex Bank, supra, as authority for the above proposition, but made no allusion to the difference between the charter of the Essex Bank and the act of Congress under which the defendant corporation was organized, as to the powers thereby respectively conferred upon each corporation. In the act of Congress, the powers of national banks are enumerated. This is not the case with the charter of the Essex Bank; and its powers were — 398 — to be determined by implication and usage, and were therefore more or less dependent upon the action of its directors. Woodward, J., who delivered the opinion of the court in this case, Bank v. Graham, says : “ The rule above stated has been uniformly applied by this court in cases involving the rights and duties of national banks. The principle announced in the recent New York and Yermont cases—The First National Bank of Lyons v. The Ocean National Bank, and Wiley v. The First National Bank of Brattleboro—has never been adopted here, so far as it is in conflict with the rule. If the question here had grown out of an act prohibited by law, the principle of these recent authorities would be applicable, as it was applied in Fowler v. Scully, 72 Penn. 456; but the question arises out of an act which has been neither directly nor impliedly forbidden by statute.” This, we think, is begging the question. The 8th section of the act of Congress, under which national banks are organized, makes them banking corporations, with “ all such incidental powers as shall be necessary to carry on the business of banking by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits ; by buying and selling exchange, coin, and bullion ; by loaning money on personal security; and by obtaining, issuing, and circulating notes according to the provisions of this act.” The “ deposits ” here referred to, are deposits of money received by banks in the usual course of business, and have none of the qualities of a bailment. The money deposited becomes the property of the bank, and the relation of debtor and creditor is created between the depositor and the bank. The powers of national banks being enumerated in the act of Congress by which they are created, the maxim,’ expressio unius est exclusio alterius, if applied in the interpretation of this act, would prohibit national banks from entering into such a contract of bailment as the one in question, as a depositary, unless it is an implied power, necessary to carrying on the business of banking. We do not think it is. On the other hand, it would be hazardous for banks to possess and exercise this power ; and it is no more incidental to them than to an insurance company, or a man — 399 — ufacturing company, or any other corporation, to receive and keep in their vaults special deposits of securities and other property of great value, for safe keeping, without compensation, for the benefit of the depositors, and thereby have resting upon them the liabilities of such depositary or bailee. ' As was well said by Allen, J., in First National Bank v. Ocean National Bank, 60 N. Y. 289, “-The deposit of these bonds cannot be distinguished from a deposit of jewelry, or plate, or other valuable property, and was a special transaction, not within the ordinary course and business of banking, or necessarily incident to it. If authorized, it added greatly to the risk of loss to the shareholders, without adding to their gains. It was a holding out of greater inducements to burglars and robbers from without, and might prove of greater temptation to dishonesty on the part of clerks and employees within, the bank.” And the learned Judge also says, that he fully concurs in the views expressed in the opinion of Wheeler, J., in Wiley v. Bank, supra. The views expressed by Agnew, J., in Fowler v. Scully, supra, referred to by the learned Judge who delivered the opinion of the court in National Bank v. Graham, supra, hardly sustain the rule laid down by the latter as the law in Pennsylvania upon this subject. The act of Congress pursuant to which national banks are incorporated, provides in the 8th section, for their loaning money on personal security ; and also in a subsequent section, that they can purchase and convey such real estate as shall be mortgaged to them in good faith by way of security for debts previously contracted. The validity of a mortgage given to a national bank to secure a loan, was the question before the court in Fowler v. Scully, supra. In the very able opinion of Agnew, J., in that case, following an enumeration of the powers of national banks contained in the 8th section of the act of Congress in question, we find this language: “ In view of the interpretation of such charters given to us by the Federal courts, and the maxim, ‘ expressio unius est exclusio alterius,’ the argument might close with the terms of the power to loan money on personal security.” — 400 — In the very valuable work of Angelí & Ames on Corporations, s. 256, we find the following rule for determining what contracts a corporation can make : “ In deciding whether a corporation can make a particular contract, we are to consider in the first place whether its charter, or some statute binding upon it, forbids or permits it to make such a contract; and if the charter and valid statutory law are silent upon the subject, in the second place, whether the power to make such a contract may not be implied on the part of the corporation, as directly or incidentally necessary to enable it to fulfill the purpose of its existence, or whether the contract is entirely foreign to that purpose.” The act of Congress in question being silent upon this subject, is the power to make the alleged contract'implied, on the part of the defendant corporation, as directly or incidentally necessary to enable it to fulfill the purpose of its existence ? Eor the reasons before stated, we think not. In our opinion, the alleged contract of bailment is entirely foreign to that purpose ; and if made by or in behalf of the defendant bank, was ultra vires, and imposed no legal obligation or duty upon the corporation as bailee. See Pearce v. Madison & Indianapolis R. R. Co. 21 How. 441; Vt. & Canada R. R. Co. v. Vt. Central R. R. Co. 34 Vt. 47; Bullard v. Banks, 18 Wall. 389; Head v. Armory, 2 Cranch, 167; Wickler v. First National Bank, 42 Md. 581; First National Bank v. Ocean National Bank, supra. It was claimed in the argument, that the act contemplates receiving both general and special deposits, from the fact that the 46th section makes- it lawful for banks, after they have stopped business, and while winding up their affairs, “ to deliver special deposits.” But this same point was made in Wiley v. Bank, supra; and what was said by Wheeler, J., on this point in his very able opinion in that case, fully answers the argument for the plaintiff upon the same point in this case. The term, special deposits, is generic, and we think, as used in this section, refers only to such class of special deposits as are incidental to the business of banking; for example: money deposited for a specific purpose, as, to pay a note or bill of exchange, made payable at the bank. — 401 — However much we may dislike to differ with so able a court as the Supreme Court of Pennsylvania, the cases to which we were referred by the learned counsel for the plaintiff, in our opinion furnish no reason why Wiley v. Bank, supra, should be overruled. On the other hand, that case still has the approval of all the members of this court. Judgment affirmed.