Asher v. Sutton

The opinion of the court was delivered by Hokton, C. J.: The contention is, that neither,the president nor the cashier of a bank organized under the laws of the state has the power, virtute offieii, to sell the safe for a debt of the bank, and therefore that the bill of sale executed October 11th, 1878, by the president and cashier of the Exchange bank of Lawrence, did not transfer the safe of the bank, or any right, title, or interest therein, to the plaintiff below. This position is well taken. Sec. 129, ch. 23, Comp. Laws of 1879, reads: “The affairs and business of any such association [bank] shall be managed and controlled by a board of directors, not less than five nor more than nine in number, from whom there shall be designated by themselves a president and a secretary, who shall hold their offices for one year, and until their successors are elected and duly qualified. Said board of directors shall designate who shall act as cashier, and said board of directors may appoint and remove such cashier.” This court, in the case of National Bank v. Drake, 29 Kas. 325, said: “The directors constitute the governing body of the bank; the bank itself being an incorporeal entity, without power to see or know. The directory constitutes the visible representative, the thinking, knowing head of the bank.” Morse on Banks and Banking, 107, thus states the rule: “The general control and government of all the affairs and transactions of the bank rest with the board of directors. For such purposes the board constitutes the corporation, and uniform usage imposes upon them the general superintendence and active management of the corporate concerns.” [289] Of course what the president and cashier do, by the action of the directors, is binding upon the bank. In the usual division of duties, to the president it belongs to represent the bank in its collateral business relations. The cashier is the executive of the financial department of the bank, and whatever is to be done, either to receive or pass away the funds of the bank for banking purposes, is done by him or under his direction; he therefore directs and represents the bank in the reception and emission of money for banking objects. (United States v. Bank, 21 How. 356; Merchants’ Bank v. State Bank, 10 Wall. 604; Com. Bank v. Norton, 1 Hill, 501.) But neither the president nor the cashier can impose by his own action, on the bank, any liability not already imposed by law or usage; nor can they bind the bank, in the absence of authority from the directors, by any agreements or contracts outside of the range of their duties. (Bank v. Dunn, 6 Pet. 51.) We suppose that any contract formally executed by the president and cashier of the bank, under the corporate seal of the bank, bears upon its face the presumption that it was executed by authority of the directors, who are in law the governing body of the bank; but this presumption may be repelled by evidence, and the contract avoided by proof that the president and cashier had never been authorized or directed by the board of directors of the bank to consent to the contract, or execute it. In this case the finding of the court is, that the president and cashier made and executed the bill of sale without any authority or direction from the directors. The mere fact that they had conducted the business of the bank gave them no authority to make the sale. As these officers had no power to execute the bill of sale, and as it is not claimed that the directors ever ratified their act, the plaintiff below was not the owner of the safe at the commencement of her action. (Bank v. Dunn, 6 Pet., supra; Bank of Metropolis v. Jones, 8 Pet. 16, 17; Adriance v. Roome, 52 Barb. 399; Walworth County Bank v. Farmers’ Loan & Trust Co., 14 Wis. 325; [290] Chicago & N. W. Rld. v. James, 22 id. 194; Blood v. Marcuse, 38 Cal. 590; Angell & Ames on Corp., § 298, pp. 322 and 323.) The judgment of the district court must be reversed, and the cause remanded with direction to enter judgment upon the findings of fact for the plaintiffs in error. All the Justices concurring.