Where the cashier of a bank wrote to the Secretary of the
Treasury, saying that the bearer of the letter was authorized to
contract for the transfer of money from New York to New Orleans,
and such a transaction was not within the scope of the powers of
the cashier nor authorized by the directors, the bank was not bound
to reimburse the money which the Secretary of the Treasury
advanced.
The facts of this case and also the instructions given to the
jury upon the trial are all set forth in the opinion of the
Court.
Page 62 U. S. 360
MR. JUSTICE WAYNE delivered the opinion of the Court.
The only question arising on this record is whether the court
erred in so much of the charge to the jury as is set out in the
bill of exceptions. Objections were taken in the course of the
trial to testimony, but no exceptions were taken to the rulings of
the court upon them. The declaration in the case contained two
counts -- one of them alleging that a contract had been made
between the City Bank of Columbus and the United States, by which
the bank agreed, on the 1st November, 1856, to transfer one hundred
thousand dollars of the public money from New York to New Orleans
by the first of January, 1851, free of charge, and the other
account for money had and received by the bank for the use of the
United States.
The charge given by the court was confined to the first count.
The bill of exceptions set out the following evidence, which was
introduced by the United States to show a contract with the
bank.
The following letter was written by the cashier of the bank:
"CITY BANK OF COLUMBUS"
"
Columbus, Ohio, 26th October, 1850"
"SIR: The bearer, Colonel William Miner, a director of this
bank, is authorized, on behalf of this institution, to make
proposals for the purchase of United States stocks to the amount of
one hundred thousand dollars. He is also authorized, 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."
"I have the honor to be, sir, your obedient servant,"
"THOMAS MOODIE,
Cashier"
"HON. THOMAS CORWIN"
"
Secretary of the Treasury, Washington City"
This letter was presented by Mr. Miner to Mr. Corwin on the
first of November, 1850. On the same day, Mr. Corwin wrote to Mr.
Miner the following letter:
Page 62 U. S. 361
"TREASURY DEPARTMENT, November 1, 1850"
"SIR: Your proposition of this date to transfer $100,000 from
New York or Philadelphia to New Orleans, by the 1st January next,
free of charge to the department, is accepted. You will receive
herewith a transfer draft on the Assistant Treasurer at New York,
in favor of the Assistant Treasurer at New Orleans, for $100,000,
with the authority endorsed to make the payment at New York to
you."
"I am, very respectfully,"
"THOMAS CORWIN,
Secretary"
This was followed by an undertaking for the transfer of one
hundred thousand dollars for the government from New York to New
Orleans:
"WASHINGTON CITY, November 1, 1850"
"This will certify that I have contracted with the United States
Treasury, as the agent of the City Bank of Columbus, to transfer
$100,000 from New York to New Orleans, to be deposited in the
Treasury at the latter-named city by the first day of January,
1851, free of charge. I have, in pursuance of said contract, this
day received a draft in my own hand for one hundred thousand
dollars on the United States Treasury at New York City, which is to
be accounted for in said contract."
"WILLIAM MINER"
Miner received the draft, and cashed it in person on the 2d
November, 1850, but what he did with it no one knows, or this
record does not show. It is certain that it was not repaid in New
Orleans according to the contract; and there are no proofs on this
record which can raise a presumption that the Bank of Columbus ever
received a dollar of it. There is proof that Miner was all that
time a director of the bank, and that Moodie, who gave him the
letter to the Secretary of the Treasury, was the cashier, and that
he signed his name to the letter as cashier; and that the letter
had been copied into the letter book of the bank. A bylaw of the
bank was also put in proof, to show that it might be inferred from
it that he had authority, as cashier, to empower Mr. Miner, as a
director of
Page 62 U. S. 362
the bank, to enter into such a contract as he had made with the
Secretary of the Treasury. The bylaw is:
"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; but any discount, negotiation, or contract, whether made by
the board or committee, is to be done by the consent of all
present."
It was also shown that there had not been a meeting of the
directors in either July or August, 1850. That there had been a
meeting on the 21st September, 1850, and another November 4, 1850,
nine days before the cashier gave his letter to Miner, and three
days after the date of Miner's contract, to transfer the money from
New York to New Orleans. The minutes of the bank, as kept by the
cashier, of the meetings of the directors, do not show any
intention upon the part of the directors to enter into a contract
for the purpose of buying stock of the United States, or for the
transmission of the money of the United States from the East to the
South or West, as Moodie expresses it in his letter; or that after
the negotiation of Miner, and his receiving the money from the
Assistant Treasurer in New York, that the directors or president of
the bank had any knowledge of the transaction until after Miner's
default to pay the amount at New Orleans. Moodie testifies that he
wrote the letter of the 26th of October, 1850, for Miner to
negotiate with the Secretary of the Treasury, without the knowledge
of the president or any of the directors of the bank, except Miner
himself, and that the fact that such a letter had been written was
not communicated by him to any of the directors until January
after, though he had caused a copy of it to be put in the letter
book. All of the directors, at the time of the transaction, have
sworn that Moodie had not been authorized by the board or by any of
themselves to constitute Miner such agent; that they had no
knowledge of Moodie's letter, and that they never sanctioned the
same. And there is other testimony in the case, that Moodie, as
cashier, had not the power to depute Miner for any such purpose,
and that it
Page 62 U. S. 363
would not have been done but by a resolution of the board of
directors. Upon this evidence, and some other which it is not
material to notice, the court charged the jury. After they had
retired, and consulted for some time, they came into court and
asked for further instructions, and the court gave them the
following charge in reference to the contract set out in the first
count of the declaration:
"That if they should find that the letter written by Moodie was
his own act, and had been given without the knowledge or authority
of the board of directors, or any of them individually, except
Miner, and that the agency of Miner was not constituted by or known
to the board of directors, or the directors individually, or any of
them except Miner, but was the act of the cashier alone; and if
they should find that Moodie had no power as cashier, except such
as belonged to the office of cashier generally, or such as are
given by the charter or by the bylaw or other law or usage of the
said bank, that the defendant was not concluded by that letter, and
is not bound by the contract made by Miner, with out some
subsequent ratification of the same, though the secretary had, in
contracting with Miner, relied upon it as the act of the bank."
To this charge the plaintiff excepted, and on account of that
exception alone the case has been brought to this Court by writ of
error. In our opinion, no charge could have been more comprehensive
of the merits of the case, more precise in its application to the
particulars of the testimony introduced by the plaintiff and the
defendant, or more expressive of what the law is upon such a state
of facts. It is all that the litigants could have expected, and is
liberal to both. It is also in coincidence with the views generally
entertained of the powers and duties of the cashiers of banks, by
those most familiar with the management and business of banks, and
perfectly so with such as have been expressed by this Court in
previous reported cases. It
Fleckner v. Bank of the United
States, 8 Wheat. 338,
21 U. S.
356-357, this Court said, the charter authorizes the
president and directors to appoint a cashier and other officers of
the bank, and gives the president and directors, or a majority of
them, full power and authority to make all such rules and
regulations
Page 62 U. S. 364
for the government of the affairs and conducting the business of
said bank, as shall not be contrary to the act of incorporation. It
contains no regulations as to the duties of cashiers; with the
directors it would rest to fix the duties of cashier or other
officers. Whether they have made any regulation upon this subject,
does not appear; but the acts of the cashier, done in the ordinary
course of the business actually confided to such an officer, may
well be deemed
prima facie evidence that they fell within
the scope of his duty. In the case
Bank of the
United States v. Dunn, 6 Pet. 51, the Court would
not permit the president and cashier of the bank to bind it by
their agreement with the endorser of a promissory note, that he
should not be liable on his endorsement. It said it is not the duty
of the cashier and president to make such contracts, nor have they
power to bind the bank, except in the discharge of their ordinary
duties. All discounts are made under the authority of the
directors, and it is for them to fix any conditions which they may
think proper in loaning money. The court defines the cashier of the
bank to be an executive officer, by whom its debts are received and
paid, and its securities taken and transferred, and that his acts,
to be binding upon a bank, must be done within the ordinary course
of his duties. His ordinary duties are to keep all the funds of the
bank, its notes, bills, and other choses in action, to be used from
time to time for the ordinary and extraordinary exigencies of the
bank. He usually receives directly, or through the subordinate
officers of the bank, all moneys and notes of the bank, delivers up
all discounted notes and other securities when they have been paid,
draws checks to withdraw the funds of the bank where they have been
deposited, and, as the executive officer of the bank, transacts
most of its business.
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
Page 62 U. S. 365
usual and customary way. Nor has it ever been decided that a
cashier could purchase or sell the property, or create an agency of
any kind for a bank which he had not been authorized to make by
those to whom has been confided the power to manage its business,
both ordinary and extraordinary. The case of
Kirk v. Bell,
12 Eng. & C.L.R. 389, and that of
Hoyt v. Thompson,
were very appropriately cited by the counsel of the appellee, in
this connection, and we think the safe rule in all instances of
acts done by the officers of corporate companies, or by those who
have the management of their business, from which contracts are
alleged to have been made is to test that fact by an inquiry into
the corporate ability which has been given to them and to their
subordinate officers, or which the directors of the company can
confer upon the latter to act for them. Such was the view of this
Court when it decided, in the case of
Bank of the
United States v. Dunn, 6 Pet. 51, that a release
given by its president and cashier to the endorser of a promissory
note of his liability upon it, did not bind the bank, neither nor
both having any authority to make contracts of that kind. The case
before us is one in which a cashier acts alone, and in which he
testifies that he did so without any consultation with the
president or directors of the company, and of which they had no
information from him of the transaction until after the failure of
Miner to pay the money in New Orleans. The act under which the City
Bank of Columbus became a corporation does not, in any part of it,
give any power to a cashier to act independently of the directors.
No specific power is given to the directors to appoint a cashier.
In the general power given to the directors to appoint officers to
do the ordinary business of the bank, they have an authority to
appoint a cashier, and such an appointment is a limitation of that
officer's executive function in doing the business of the bank. It
cannot be pretended that the directors, as a whole, or anyone of
them, except Miner, consented to the cashier's designation of Miner
for any such purpose as was concluded between them, to induce the
secretary to believe that Miner was the agent of the bank, either
to buy stock of the United States or to enter into
Page 62 U. S. 366
contracts for the transmission of money, free of charge, to
those posts where the United States should designate it to be put.
Such a power in the Secretary of the Treasury is a necessary one
for the transaction of the business of the government, pervading,
as it does, every part of the country. The exercise of it, however,
requires great care and caution in the selection of agents for such
a purpose, and no authority short of the most certain should be
taken to establish the representative character of anyone for a
private company or corporation to enter into such a contract with
the secretary.
The United States, as plaintiff in this action, has failed to
establish the contract which it alleges in its declaration had been
made with the City Bank of Columbus, for the transmission of money,
and we direct the judgment given in the court below to be
Affirmed.