First National Bank v. Graham ( 1875 )

Mr. Justice Woodward

delivered the opinion of the court, October 13th 1875.

On the 22d of October 1868, Fannie L. Graham, the plaintiff below, deposited United Stat.es bonds, amounting to $4000, in the First National Bank of Carlisle, for safe-keeping. They were to be returned on the return of the receipt which was given to her by Chas. H. Hepburn, the cashier. Never having been returned, this suit was brought to recover their value. On the part of the defendants evidence was introduced to show that the bonds, together with money and securities belonging to the bank, its officers and other parties, had been stolen from the vault on the 5th of August 1871. Upon the trial the plaintiff was permitted to prove by Mrs. Trout that “she had a deposit of government bonds in the same bank for safe-keeping ; that she drew the interest and premium on her bonds regularly until the bank closed; and that, though living just opposite the bank, she never knew or heard of the alleged disappearance.” The object of the offer was stated to be “ to rebut the presumption that there ever was any robbery, and to show that the bonds remained in the bank till its close.” The testimony of Mrs. Trout was followed by that of F. S. Dinkle, to the same general effect. Its admission raises the first question the record presents.

Throughout the trial, the proof had been distinct and clear that the fact of the robbery had never been publicly disclosed. The officers feared that such a disclosure would injuriously affect the credit of the bank, and the president and cashier undertook, in their individual capacities, to become liable for the principal, interest and premium of the bonds of depositors that had been lost. Notice was given to the Assistant United States Treasurer in New York, and to the Treasury Department at Washington. The plaintiff was informed of the loss through her brother, residing in Monmouth, 111., some bonds issued by an association there being among her securities, and notice that they had been stolen having been given to that association by the officers of the bank. This, the plaintiff testified, was three or four weeks after the robbery. She called on the cashier, who told her to say nothing and keep quiet; that it was their loss and not hers. She afterwards saw Judge Hepburn, the president, who made the same request that she should say nothing, and gave the same assurance that she should be paid. As to the other depositors, the proof was definite that, whether wisely or unwisely, all publication of the fact of the robbery was sedulously withheld. What, then, was to be gained by the admission of the testimony of these witnesses ? It contradicted no facts alleged on behalf of the defence. It was consistent with the statement of the cashier, that he and Judge Hepburn had personally undertaken to pay the interest on the lost bonds. The facts were not only collateral, but they were superfluous for any legitimate purpose of the plaintiff’s case. If the failure to make publication had been disputed, and there had been, in the judgment of the court, other affirmative and express evidence before the jury, on the question whether the whole theory of a robbery had been fabricated, it may be that the ruling would have been justified by the salutary principles which enlarge the field of inquiry where it becomes necessary to develop and expose an attempted fraud. There is nothing in this record to exclude the application of the rule that requires the rejection of all collateral facts which are incapable of affording any reasonable presumption or inference as to the principal matter in dispute. And the reason given in the ■ text-books for the existence of the rule seems peculiarly applicable here: “ Such evidence tends to draw away the minds of the jurors from the point in issue, and to excite prejudice and mislead them ; and, moreover, the adverse party having had no notice of such a course of evidence, is not prepared to rebut it 1 Greenl. Evid., § 52. The case of Pratt v. Richards, 19 P. F. Smith 58, is relied on to sustain the ruling of the court. There, Richards, the lessee of Cooley, had sublet part of the demised premises to Pratt & Co., the defendants. In May 1861, the defendants failed, and asked Richards to cancel the lease. By the evidence offered and rejected in the court below, it was proposed to show that in June or July 1861, Richards had surrendered his entire interest in the premises to the agent of Cooley, the owner, who placed a new tenant in possession of the room the defendants had occupied. The suit was by the assignees of Richards for rent for fifteen months subsequent to May 1851. This court held the evidence to be admissible, and it is difficult to conceive of any principle on which any other conclusion could have been reached. But it is not apparent how that decision can have any bearing as an authority on the question presented here. •Nor is the objection of the defendants met by the first suggestion, that the evidence of these witnesses was competent because it tended to establish the fact that notice by advertisement or otherwise was not given. The question of notice was not in controversy. It was both proved and admitted by the defendants as part of their own case, that public announcement of the robbery was purposely withheld. The evidence was improperly received.

The next question is presented by the series of assignments which allege error in the instructions given to the jury as to the measure and extent of the responsibility of the defendants. Assuming for present purposes on the faith of the verdict, that the act of the cashier was so far acquiesced in and ratified by the officers and directors, as to create a contract between the plaintiff and the bank, it is manifest that the contract amounted at the utmost to .a naked bailment. It was a deposit without compensation. No undertaking was expressed except that the bonds were to be returned on the return of the cashier’s receipt. The law regulating such a contract has been settled since the decision of Coggs v. Bernard, 2 Ld. Raym. 909, in the year 1703. “ Where a man takes goods into his custody to keep for the use of the bailor,” it was said by Holt, C. J., in that case, “he is not answerable if they are stole without any fault in him,, neither will a common neglect make him chargeable, but he must be guilty of some gross neglect.” The principles which govern the relations between bailors and bailees are succinctly stated in Story on Bailments, sect. 23. “ When the bailment is for the sole benefit of the bailor, the law requires only slight diligence on the part of the bailee, and of course makes him answerable only for gross neglect. When the bailment is for the sole benefit of the bailee, the law requires great diligence on the part of the bailee, and makes him responsible for slight neglect. When .the bailment is reciprocally beneficial to both parties, the law requires ordinary diligence on the part of the bailee, and makes him responsible for ordinary neglect.” In Tompkins v. Saltmarsh, 14 S. & R. 275, Duncan, J., in delivering the opinion of the court, said: “ Where one undertakes to perform a gratuitous act, from which he is to receive no benefit, and the benefit is to accrue solely to the bailor, the bailee is liable only for gross negligence, dolo proximus, a practice equal to a fraud. It is that omission of care which even the most inattentive and thoughtless men take of their own concerns. There is this marked difference in cases where ordinary diligence is required, and where a party is accountable only for gross neglect. Ordinary neglect is the want of that diligence which the generality of mankind use in their own concerns, and that diligence is necessarily required where the contract is reciprocally beneficial. The bailee without reward is not bound to ordinary diligence, is not responsible for that care which every attentive and diligent person takes of his own goods, but only for that care which the most inattentive take.”

These principles were applied by Coulter, J., in Lloyd v. The West Branch Bank, 3 Harris 176, and by the present chief justice in Scott v. The National Bank of Chester Valley, 22 P. F. Smith 471, and were recognised by Thompson, C. J., in The Lancaster County Bank v. Smith, 12 P. F. Smith 54. In view of these well-established rules, the presentation to the jury of the legal aspects of this cause was inadequate and imperfect. There was no dispute that this was a gratuitous bailment, and in the general charge the court properly limited the responsibility of the defendant to a case of gross neglect. But this gross neglect was defined to be “ the omission of those precautions which persons of common care and common prudence would naturally adopt, though they might, in reference to their own goods, omit them.”

In the plaintiff’s first point, the court were asked to charge that the defendants were “ bound to exercise ordinary care, skill and diligence to keep and return the bonds safely; such care as men of ordinary prudence exercise in the care of thoir own property.” The answer was in these words : “First point affirmed, and for the meaning of gross negligence the jury are referred to the general charge.” In the plaintiff’s third point, the court was asked to say, that “ if the defendants were negligent, and did not exercise ordinary care, skill and caution, to keep the plaintiff’s bonds safely, then they are liable for their value, no matter how negligent they may have been in taking care of their own property.” The answer was: “Affirmed — see general charge.” The defendants had the right to complain of the manner in which the case was submitted to the jury. The standard of duty established for them was one to which they could not, under the evidence, be justly held. In the language of Judge Duncan, in Tompkins v. Saltmarsh, “ they were responsible for the omission of care which even the most inattentive and thoughtless men take of their own concerns.”

Upon the trial the ground was assumed by the defendants that there could be no recovery against them if the jury should find that they had taken the same care of the plaintiff’s bonds that they had taken of their own securities, and complaint is now made of the failure of the court to sustain their position. In a multitude of cases, language has been used by judges which would seem to indicate the existence of the rule for which the defendants contend. Such language was employed in Foster v. The Essex Bank, 17 Mass. 479, and in the cases already referred to, of Coggs v. Bernard, Lloyd v. The West Branch Bank and Scott v. National Bank of Chester Valley. In general, however, this view of the law has been abstractly stated, and where it has been applied, as in Lloyd v. The West Branch Bank, the diligence used by the bailee in the oversight equally of the deposit and his own property, corresponded with that diligence to which, in the circumstances of the particular bailment, the law held him bound. The authorities relied on by the defendants “ do not seem,” Judge Story has said, “ to express the general rule in its true meaning. The depositary is bound to slight diligence only; and the measure of that diligence is that degree of diligence which persons of less than common prudence, or indeed of any prudence at all, take of their own concerns. The measure, abstractly considered, has no reference to the particular character of an individual, but it looks to the conduct and character of a whole class of persons Story on Bailments 564. The fact that the bailee keeps the property of the bailor, with the ordinary care with which he keeps his own, does not fulfil the measure of his legal duty where the contract is one which requires strict diligence and extraordinary care. So, under a contract of bailment, in which the benefits are reciprocal, the bailee is not shielded from liability for neglect of ordinary care by proving that he has been careless, inattentive and reckless in the management of his goods as well as those of the bailor. Cases for the application of the maxim of the Emperor Constantine, quoted in Jones on Bailments 83, “ Aliena negotia exaeto officio gerunter,” must constantly arise. The terms used in the authorities referred to are employed more by way of illustration than as a statement of the legal rule. That the bailee has dealt with his property and the bailor’s in the same way, is a fact which may be always shown as an element in adjusting the standard of duty, and deciding the question of its performance, as well as a test of the bailee’s good faith. On the proof of such a fact, a presumption of adequate diligence would ordinarily arise. But the question of the bailee’s responsibility must be finally settled by a resort to the settled principle which deduces the measure of his duty in each particular bailment, from a comparison of his conduct with the conduct not of individuals, but of classes of men. The instructions of the ■court on this subject in the general charge were, that, if the bailee “ takes the same care of the goods bailed that he does of his own, that ordinarily repels the presumption of gross negligence. The desire to preserve one’s own property from loss from any cause is, as a rule, so universal, that the mind rests with satisfaction on the evidence which shows the same care of the bailed property which the bailee took to save his own, unless it was shown that he was grossly negligent of both, and when this is done he is not excused, but held answerable.” ' It is conceived that these instructions were unobjectionable. Whether the defendants were guilty of such gross negligence as to make them liable, was a question which, like that which was raised as to the fact of robbery, and like the other issues involved, it was for the jury, under all the evidence, exclusively to decide.

Another error is alleged to have consisted in the answer by the court to the plaintiff’s seventh point, relating to the failure of the bank to give notice of the robbery, and in the direction given to the jury on the same subject in the general charge. The discussion of the point undoubtedly was unduly amplified. The limitation of the plaintiff’s right to a verdict only in the event that gross negligence should be made out, was neither expressed nor implied. The instruction, in substance, was, that she could recover if injury resulted to her from the failure of the defendants to give her notice, and that she could recover for such injury, if found, even though the presumption of negligence arising from the want of notice was repelled by proof. The effect of such a direction could only be to leave the precise question on which the jury were to pass in obscurity and doubt. The plaintiff in her testimony stated that she received intelligence of the loss through her brother in Monmouth three or four weeks after it occurred. Charles H. Hepburn thought the interval between the loss and the conversation he had with the plaintiff in regard to it was only eight or ten days. From the time she received notice, if upon a fair representation of their views and motives, she acquiesced in the policy of silence which the officers of the bank had adopted, it would be unjust to permit her to set up the subsequent maintenance of that policy as a ground for the imputation of gross negligence against the defendants. But the fact that no announcement W'as made in the interval, whatever it was, before the plaintiff was informed of the loss, was fairly a subject for the consideration of a jury. It was for them to weigh it in connection with the other evidence, in deciding the material issues in the cause. Its relevancy and value are shown by the significance that was attached to the proof of the conduct of a bailee contemporaneously with and immediately after a loss of property, in Tompkins v. Saltmarsh, supra. “I am of opinion likewise,” Judge Duncan said, “that evidence ought to have been received of the hue and cry immediately after the discovery — his assiduous and indefatigable pursuit, and strict' search, both at the inn and the steamboat. If he had made no complaint or inquiry, remained with his arms folded and his mouth shut, this would have afforded strong evidence of his delinquency; and though it has been said this would have been the course of a guilty man, yet it is one which an innocent man would naturally take, and which, if he did not take, all would condemn him. Nothing would more strongly prove his neglect than this silence, this indifference; the jury would have drawn the most unfavorable conclusions from it.” Every case must stand, of course, on its special facts. It may well be that the reasons for the action of the officers of the bank would be satisfactory to a jury, but the necessity is inevitable of submitting the question to them, whether that action involved gross neglect.

The remaining question arises out of the answer of the court to tbe second point of the defendants. The mere voluntary act of the cashier in receiving the plaintiff’s securities would not subject the bank to liability. But if the deposit was known to the directors, and' they acquiesced in its retention, a contract relation was created, by which the defendants should be held bound. The question arose in Foster v. The Essex Bank, 17 Mass. 479. That was an action to recover the value of a special deposit. The bank had no express power by charter to receive deposits of any kind, but the verdict found that the practice had been to receive them always; and Parker, G. J., said: “As the bank from the time of its incorporation has received money and other valuable things in this way, and as the practice was known to the directors, and we think must be presumed to have been known to the company, as far as a corporation can be affected with knowledge; and as the buildings and vaults of tbe company were allowed to be used for this purpose, and their officers employed in receiving into custody the things deposited, the corporation must be considered the depositary, and not the cashier or other officer through whose agency commodities may have been received into the bank. The rule thus stated has been uniformly applied by this court in cases involving the rights and duties of the national banks. The principle announced in the recent New York and Vermont cases of The First National Bank of Lyons v. The Ocean National Bank, and Wiley v. The First National Bank of Brattleboro’, has never been adopted here, so far as it is in conflict with the rule. If the question here had grown out of an act prohibited by law, the principle of these recent authorities would be applicable, as it was applied in Fowler v. Scully, 22 P. F. Smith 456. But the question arises out of an act which has been neither directly nor impliedly forbidden by statute. The answer of the court was accurate, and the complaint alleged against it in the supplemental assignment of error is unfounded.

Judgment reversed, and a venire facias de novo awarded.