Mechanics' Bank of Alexandria v. Bank of Columbia
18 U.S. 326

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U.S. Supreme Court

Mechanics' Bank of Alexandria v. Bank of Columbia, 18 U.S. 5 Wheat. 326 326 (1820)

Mechanics' Bank of Alexandria v. Bank of Columbia

18 U.S. (5 Wheat.) 326

ERROR TO THE CIRCUIT COURT

FOR THE DISTRICT OF COLUMBIA

Syllabus

The seventeenth section of the act incorporating the Mechanics' Bank of Alexandria, providing

"That all bills, bonds, notes, and every other contract or engagement on behalf of the corporation, shall be signed by the president and countersigned by the cashier, and the funds of the corporation shall in no case be liable for any contract or engagement unless the same shall be signed and countersigned as aforesaid."

Where a check was drawn by a person who was the cashier of an incorporated bank and it appeared doubtful upon the face of the instrument whether it was an official or a private act, parol evidence was admitted to show that it was an official act.

The acts of agents do not derive their validity from professing on the face of them to have been done in the exercise of their agency.

The liability of the principal depends upon the facts 1st, that the act was done in the exercise, and 2d, within the limits of the power delegated.

In ascertaining these facts as connected with the execution of any written instrument, parol testimony is admissible.

This was an action of assumpsit brought by the defendants in error against the plaintiffs in error, on the following check:

Page 18 U. S. 327

"No. 18. $10,000. MECHANICS' BANK OF ALEXANDRIA. June 25, 1817. Cashier of the Bank of Columbia, pay to the order of P. H. Minor, Esq., ten thousand Dollars. WM. PATON, Jr."

This check was offered in evidence by the plaintiff below, and testimony to prove that the said Paton, before at the time and subsequent to the drawing of the said check, was cashier of the said Mechanics' Bank, and the said Minor the teller thereof, and in order to prove that the said check was drawn by the said William Paton in his capacity as cashier, and was so understood by him and so understood by the said Bank of Columbia, their officers and servants, evidence was further offered to prove that from 5 May, 1817, to the time of drawing the said check, there was kept in the said Mechanics' Bank by the proper officer thereof a book of printed checks in blank for the purpose of being used by the cashier in drawing his official checks, and that the check in question had been cut out of the said book. That the said cashier, in his official character, had frequently used the blank checks out of the said book, in drawing upon other banks in the district, and there was no other difference between the checks so drawn and the check in question other than the letters "Cas." or "Ca." being superadded to the name of the said William Paton, Jr., in the checks

Page 18 U. S. 328

so drawn upon the said other banks. That although the said check book was intended for the use of the bank, the checks in the same were sometimes used for other purposes. That the business of the said banks was some times managed through the medium of letters, and in such official correspondence it was usual to subscribe the names of the cashiers with the addition of some letters denoting their capacity of cashier, but such form was sometimes omitted, and was in no case deemed indispensable when, from other circumstances, such correspondence appeared to be official. The plaintiffs further offered in evidence two letters of the said William Paton directed to William Whann, cashier of the Bank of Columbia, each signed with the proper name of the said William Paton, without the addition of cashier or the letters "Cas." or "Ca.," one of which letters related to the private concerns of the said William Whann and the other to the concerns of the bank.

Evidence was further offered to prove that the check given in evidence as aforesaid was (together with a number of other checks drawn by the said William Paton upon other banks, with the addition in his signature of the letters "Ca." and "Cas." and cut out of the official check book), sent by the said Paton, on 12 July, 1817, by the hands of the said Philip H. Minor, then being teller as aforesaid, to Richard Smith, cashier of the Office of Discount and Deposit of the Bank of the United States at Washington, to be paid in liquidation of a balance due from the said Mechanics' Bank to the said Office of Discount and Deposit. That the said letter was

Page 18 U. S. 329

delivered by the said Minor to the said Smith, and the checks and moneys contained in the same were applied to the credit of the said Mechanics' Bank. That among the checks so sent was one for $17,626.05, written upon and cut out of the check book aforesaid, and in the words and figures following, to-wit:

"Mechanics' Bank of Alexandria, July 12, 1817. No. 32. Cashier of the Branch Bank of the United States, Washington -- Pay to the order of Philip H. Minor, amount of discount made me, which I believe is $17,626.05."

"WM. PATON, Jr."

That the said Richard Smith, about 17 July, 1817, did cause the same to be presented to the Bank of Columbia for payment, and the same was accordingly paid, and was thereupon immediately charged to the said Mechanics' Bank.

Evidence was further offered to prove that the said Richard Smith considered the said check as the official check of the said William Paton, and it was so paid by him, and that the cashier of the Bank of Columbia also considered it as the official check of the said Paton, and it was so paid by him.

Evidence was further offered on the part of the Mechanics' Bank to prove that the said William Paton, at the time he drew the said check, declared it was his private individual check; that he had

Page 18 U. S. 330

funds in the Bank of Columbia to meet it, and that it was passed by him to the said Mechanics' Bank as the individual check of the said William Paton. And evidence was further offered to prove that the Mechanics' Bank paid to the said Paton the amount of the said check.

Upon the evidence thus offered by the plaintiffs below, the counsel for the defendants objected to the whole of the said evidence, and insisted, that if the said check for $10,000 could be used as evidence against the said Mechanics' Bank, that the character of the said check could only be decided by the check itself, and that no parol or other testimony could be received to explain the same, and objected to the testimony offered upon that ground. But the court overruled the objection and gave it as their opinion to the jury that the said check was, in connection with the other evidence, proper and competent evidence in this case against the said Mechanics' Bank, and that it was competent to explain the character of the said check -- or in other words to prove, by parol or other testimony, that the said check was drawn under such circumstances, and in such a manner as justified the plaintiffs in considering it as an official check and paying it as such, and charging the same to the debit of the defendants. And the evidence offered as aforesaid, with the said check, was admitted by the court and given in evidence to the jury.

The defendants below then prayed the opinion of the court and its instruction to the jury that the check for $10,000 produced in evidence

Page 18 U. S. 331

by the plaintiffs is, on the face of it, a private, and not an official check, and of itself cannot in law charge the Mechanics' Bank with the payment of the said $10,000, and that the said William Paton was liable in his individual character for the payment of the same. Which opinion the court refused to give.

They also prayed the court to instruct the jury, that the check aforesaid was, upon the face of it, prima facie evidence of its being the private individual check of the said William Paton, and the possession of the said check by the said Mechanics' Bank, if proved to be in their possession, was prima facie evidence that they had paid a value for it, and that unless the Bank of Columbia should satisfy the jury by other evidence than the said check that it was an official check of the cashier of the said bank, that the jury should find its verdict for the defendants. Which instruction the court refused to give.

The defendants below also prayed the court to instruct the jury that if it should be of opinion that the check was drawn by the said William Paton as his individual check and was received by the said Mechanics' Bank as the individual check of the said William Paton, and that the bank paid to the said Paton the full amount of the said check, that then the said bank, having received the amount thereof from the bank of the United States as aforesaid, would have a right to retain the amount of the said check as against the said Bank of Columbia, notwithstanding the said Bank of Columbia may have been under an impression that it was the official check

Page 18 U. S. 332

of the said William Paton. Which instruction the court refused to give.

A bill of exceptions was filed, and a verdict and judgment thereon having been rendered for the plaintiff, the cause was brought by writ of error to this Court.

Page 18 U. S. 334

MR. JUSTICE JOHNSON delivered the opinion of the Court.

The merits of this case lie within a very limited compass. The question is whether a certain

Page 18 U. S. 335

act, done by the cashier of a Bank, was done in his official or individual capacity. Had the draft, signed by Paton, borne no marks of an official character on the face of it, the case would have presented more difficulty. But if marks of an official character not only exist on the face, but predominate, the case is really a very familiar one. Evidence to fix its true character becomes indispensable.

It has been contended, but the argument was not pressed with much confidence, that this defendant could not be bound otherwise than in conformity with the 17th section of the charter, by which it is enacted

"That all bills, bonds, notes, and every other contract or engagement, on behalf of the corporation shall by signed by the president and countersigned by the cashier, and the funds of the corporation shall in no case be liable for any contract or engagement unless the same shall be signed and countersigned as aforesaid."

It is to be hoped this argument was not intended to reach the case of a deposit of money, and yet if it proves anything, it proves that no contract in law could be imputed to this bank. The truth is that a check is properly neither a bond, bill, or note, with regard to the bank drawn upon, but an acquittance. And the contract arising out of a payment upon it is a contract for money advanced, and must be so declared upon. It is true that checks are generally made payable to bearer, and this was made payable to order; but it is in evidence that it was drawn as a check and paid as a check, and the declaration contains only the common money counts.

Of the six exceptions in the transcript of the

Page 18 U. S. 336

record, the 1st, 2d, 4th, and 5th, are taken on behalf of the Mechanics' Bank of Alexandria. Upon comparing these exceptions with the evidence, it does not appear that they affirm any other proposition growing out of that evidence, but that the check, on the face of it, purported to be the private check of Paton, and no extrinsic evidence could be received to prove the contrary.

The only ground on which it can be contended that this check was a private check is that it had not below the name the letters "Cas." or "Ca." But the fallacy of the proposition will at once appear, from the consideration, that the consequence would be that all Paton's checks must have been adjudged private. For no definite meaning could be attached to the addition of those letters without the aid of parol testimony.

But the fact that this appeared on its face to be a private check is by no means to be conceded. On the contrary, the appearance of the corporate name of the institution on the face of the paper at once leads to the belief that it is a corporate and not an individual transaction, to which must be added the circumstances that the cashier is the drawer and the teller the payee, and the form of ordinary checks deviated from by the substitution of "to order" for "to bearer." The evidence, therefore, on the face of the bill predominates in favor of its being a bank transaction. Applying, then, the plaintiff's own principle to the case, and the restriction as to the production of parol or extrinsic evidence could have been only applicable to himself. But it is enough for the purposes of the defendant to establish that there existed,

Page 18 U. S. 337

on the face of the paper, circumstances from which it might reasonably be inferred that it was either one or the other. In that case it became indispensable to resort to extrinsic evidence to remove the doubt. The evidence resorted to for this purpose was the most obvious and reasonable possible -- viz., that this was the appropriate form of an official check; that it was in fact cut out of the official checkbook of the bank and noted on the margin; that the money was drawn in behalf of, and applied to the use of the Mechanics' Bank, and by all the banks, and all the officers of the banks through which it passed recognized as an official transaction. It is true it was in evidence that this check was credited to Paton's own account, on the books of his bank. But it was done by his own order, and with the evidence before their eyes that it was officially drawn. This would never have been sanctioned by the directors unless for reasons which they best understood, and on account of debits which they only could explain.

It is by no means true, as was contended in argument, that the acts of agents derive their validity from professing, on the face of them, to have been done in the exercise of their agency. In the more solemn exercise of derivative powers, as applied to the execution of instruments known to the common law, rules of form have been prescribed. But in the diversified exercise of the duties of a general agent, the liability of the principal depends upon the facts 1. that the act was done in the exercise, and 2. within the limits of the powers delegated. These

Page 18 U. S. 338

facts are necessarily inquirable into by a court and jury, and this inquiry is not confined to written instruments (to which alone the principle contended for could apply), but to any act with or without writing within the scope of the power or confidence reposed in the agent -- as, for instance, in the case of money credited in the books of a teller or proved to have been deposited with him, though he omits to credit it.

Judgment affirmed.

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