Winsor v. Lafayette County Bank

Opinion by Ellison, J. The evidence in this case fails to show any authority on the part of the cashier to make the employment alleged in the petition, and so does it fail to show a ratification, on the part of the defendant. A banking corporation, of course, acts through its official agents and is held strictly to the contracts made — 672 — in the name of, and on behalf of the corporation. But the acts of officers must be such, as is in the line of their duty or agency. It is not among the ordinary duties of a cashier to bargain and sell real estate nor to contract with brokers for that purpose. 'Such is not the understanding of the duties or powers of a cashier. The duty of the cashier of defendant as stated in the by-laws are somewhat more circumscribed than those commonly supposed to devolve upon that officer and as his duty is defined to be, by the supreme court of the United States in the case of the United States v. City Bank of Columbus (21 Howard 360). There is nothing in the case going to show any previous authority given to the cashier, either by direct act of the directory, or by a line of conduct which would now estop the defendant. There is nothing to show he had ever attempted to exercise such authority before, or that a case substantially of this character had ever occurred, in the history of the bank. Neither is there any evidence of a ratification of the contract declared to have been made by the cashier. But on the other hand the evidence on that subject is that the contract as claimed was wholly repudiated by the other members of the directory. There being, then, no authority in a cashier, as such, to make the contract, there being no line of previous conduct on part of the officials estopping’ them in this case, and there being no ratification shown, plaintiffs’ case, necessarily fails. It is an evident proposition that sales of real estate are not among the ordinary functions and duties of the cashier of a bank. Judge Shepley gives a succinct statement of their duties : he says, the duties of a cashier are “to keep the funds, notes, bills and other choses in action of the bank to be used from time to time for the exigencies of the bank, to receive directly and through subordinate officers all monies and notes of the bank; to surrender notes and securities upon payments; to draw checks ; to withdraw funds of the bank on deposit; and generally to transact as the executive officer of the bank the ordinary — 673 — routine of business. But the ordinary duties of a cashier do not comprehend the making of a contract which involves the payment of money, without an express authority from the directors, unless it be such as relates to the usual and customary transactions of the bank.” Morse v. Mass. National Bank, 1 Holmes U. S. C. C. 209; and to the same effect is Bank of the United States v. Dunn, 6 Peters 51. Morse in his work on Banks and Banking 152, says: “ The key note to the whole subject lies in this; that the office of the cashier is strictly executive. He is the business officer of the bank, but in the .sense of one who transacts the business, not of one who regulates and controls it. They (directors) are the mind and he (cashier) is the hands of the corporation. They may decide to make a certain loan or discount, to sell or mortgage corporate property; he will pay over the money, take the borrower’s promissory note, and see that it is in proper form; he may, by direction of the board, affix the corporate signature and seal, and make delivery on behalf of the corporation, of all instruments necessary to complete the conveyance or the mortgage.” In the United States v. City Bank of Columbus (21 How. 360), the cashier of the bank wrote the following letter to the secretary of the treasury, to-wit: " City Bank of Columbus. “Sik: — The bearer, Col. Wm. Miner, a director of this bank, is authorized, on behalf of this institution, * * * if consistent with the rules of the treasury department, to contract on behalf of this institution for the transfer of money from the east to*the south or west, for the government. * * * Thomas Moodie, cashier.” This letter was copied in the letter press book of the bank. A by-law of the bank provided: . “A committee of two shall be appointed every six months to advise with the president and cashier. In their absence all the ordinary business of the bank may be done by the president and cashier, and if either of them be not present, then by the other alone.” — 674 — Upon the faith of this letter the secretary made a contract for the transmission of $100,000 from New York to New Orleans, and delivered the same to Mr. Miner, who converted it to his own use and failed to account to the goverment. The supreme court of the United States held that the contract was void, and that the cashier had not the power to bind the bank and rendered judgment for the defendant. In this case (marg. p. 364) the court says: I-Iis acts to be binding must be ‘ ‘ within the ordinary course of his duties. He is an executive officer and his ordinary duties are to keep the funds, notes, bills and other choses in action to be used * * * for the * * * exigencies of the bank. * * * The term, ordinary business, with direct reference to the duties of cashiers of banks, occurs frequently in English cases and in the reports of the decisions of our state courts, and in no one of them has it been judicially allowed to comprehend a contract made by a cashier without an express delegation of power from a board of directors to do so, which involves the payment of money, unless it be such as has been loaned in the usual and customary Avay. Nor has it eArer been decided that a cashier could purchase or sell the property or create an agency of any hind for a bank, which he had not been authorized to make by those to whom has been confided the power to manage its busioess, both ordinary and extraordinary.” In Bank of United States v. Dunn (6 Peters), the president and cashier of the bank had released an endorser, and when sued he offered to prove the release, and the court (6 Peters,, marg. p. 59, 60), said: “Butthe most decisive objection to the evidence is that the agreement was not made with those persons who have power to bind the bank in such cases. “It is not the duty of the cashier and president to make such contracts, nor have they the power to bind the bank, except in the discharge of their ordinary duties. * * * Nor would it be bound if the assurances had been mojde in so specific and direct a manner — 675 — us to create a personal responsibility on the part of the Cashier and president?" To the same effect is Shryock v. Baschore (82 Pa. St. 159). As stated plaintiffs fail to show a ratification. Por it must be remembered that the making of the deed and carrying ont the sale, is no evidence of a contract with plaintiffs to negotiate the sale, and to pay the commission ; for the only officer with whom the plaintiffs had anything to do, denied from the start that they had made the same, or were instrumental in bringing it about. And the other officers, except Robert, knew nothing of it whatever, till sometime afterwards. Robert only knew of the claim, after the sale had been effected and agreed upon, but before the deed was made. But he only knew of it as a claim disputed by the cashier. Under such_circumstances there could not have been a ratification. To affirm that one can ratify an act of which he is ignorant, is a contradiction in terms. In Baldwin et al. v. Burrows et al. (47 N. Y. p. 211, 212), the court says : “There can be no ratification of an act without knowledge of the act having been done. The ratification of an act previously unauthorized must, in order to be binding, be made with a full knowledge of ■ all the material facts. The receipt, e.ven from an agent, of money paid him on a contract doesn’t bind the principal to the contract unless he knows on what account the money was received and the terms of the contract. The mere fact that the proceeds of a contract made by one person in the name of another without authority is not of itself sufficient to render him liable on the contract. To have that effect the proceeds must be received not only with the knowledge, but under such circumstances as to constitute a voluntary adoption of the contract.” In Moore's Ex. v. Patterson (28 Pa. St. 505), the court held, “It is error to submit to the jury the question of whether the party subsequently ratified the act of a person acting without authority, where there is no evidence that the facts were even communicated to the — 676 — party, or that he assented to the acts alleged to be done for him.” It is true that a corporation may, by a course of conduct with its officers and the public, give them authority, and confer upon them, powers they would not have as such officers, but for the usages of the corporation. It is common, and perhaps under the ruling of Judge Bliss in Western Bank v. Gilstrap (45 Mo. 419), it would be within the powers of a cashier, to employ an attorney for the prosecution or defence of a suit brought by or against the bank; this upon 'the ground that it is necessary for the protection of those interests covered by his recognized duties as cashier. But that does not meet the case or question here. The plaintiffs failed, in our opinion, to make out a case, and we would be correct, perhaps, in reversing the judgment without more; but to afford plaintiffs the opportunity to meet the requirements of law by additional proof, if they have it, the judgment is reversed and the cause remanded to be proceeded with in conformity with this opinion. All concur.