Fishkill Savings Institute v. Bostwick , 26 N.Y. Sup. Ct. 354 ( 1879 )

Gilbert, J. :

Upon the facts of this case, we have no doubt that the National Bank of Fishkill would bo liable in an action for money had and received for the sum which it received on account of the plaintiff’s bonds. Its liability in an action of trover for the conversion of the bonds is not so clear ; still an amendment, changing the action into one upon contract, cannot be made. (Code of Civ. Proc., § 723, 4 Wait’s Pr. 667.) The question then is, can the action of trover be maintained ?

A corporation is liable for the torts of its officers and agents, committed while acting within the scope of their employment, Or while engaged in performing the duties devolved upon them thereby. The law governing the relation of master and servant applies as well to corporations as to individuals. The circumstances, that would render a natural person liable for the torts of an agent, impose the same liability when the principal is a corporation. These principles are well settled, and very familiar. Difficulty in applying them sometimes arises from an uncertainty whether the act of the agent was within the scope of his employment. In order to bind a principal for a criminal act of his servant, there must be evidence of authority to do the particular act. The authority will not be inferred from the existence of any general power which is not comprehensive enough to embrace the specific act. On the contrary, the principal is entitled to the presumption in favor of innocence, as a shield against liability for crimes committed by his agent. But the principal may ratify the criminal act of his agent, and such ratification is equivalent to a •prior command. ,

In the case before us, the cashier of the defendant bank embezzled certain Uhited States bonds belonging to the plaintiff, and pledged them as security for moneys which he borrowed for said bank. Such embezzlement certainly was not within the authority, express or implied, of the cashier. Conceding that an .authority to borrow money for the bank may be implied from the nature of the cashier’s employment, and his acts done under it, yet an act of embezzlement is quite foreign to such an authority. The authority to borrow would embrace all necessary and proper means to accomplish that object; but the stealing of another’s securities, to pledge for that purpose, is not usual or proper, and .is not, therefore, within the authority conferred, but is an act altogether beyond the scope of the cashier’s employment.. If the case stopped here, no liability could be cast upon the bank. But the bank received the money borrowed, by means of the pledge of the bonds, and still retains such moneys. Such acts, we think, must operate as a ratification of the cashier’s embezzlement. It is true, indeed, that no one connected with the bank, except the •cashier, had any knowledge that the money so received had been •obtained by means of a pledge of the plaintiff’s bonds. Still the receiving of money was strictly within the scope of the cashier's •employment, and his knowledge will be imputed to the bank under the settled rule that notice to the agent is notice to the principal, if the agent' comes to the knowledge of the fact while he is acting for the principal, in the course of the transaction, which becomes the subject of the suit. (Bk. U. S. v. Davis, 2 Hill, 451 ; Holden v. N. Y. and Erie Bk., 72 N. Y., 286.) Nor can the bank retain the money in question, and repudiate the agency by which such money was obtained, for a principal will not be permitted to avow his agent’s negotiations as to part, and disavow as to the residue. (Hov. on Fraud, 144 ; Bolton v. Hillersden, 1 Ld. Ray., 224 ; Bennett v. Judson, 21 N. Y., 238 ; Elwell v. Chamberlin, 31 id., 611.) The set-off was properly rejected.

For the reasons stated, we think the judgment should be .affirmed, with costs.

Barnard, P. J., and Pratt, J., concurred.

Judgment affirmed, with costs.