City National Bank of Fort Worth v. Martin , 70 Tex. 643 ( 1888 )

Maltbie, Presiding Judge.

John Nichols was the receiving- and paying teller, also a director and. vice president of appellant, the City National Bank, of Fort Worth, and died insolvent, on the seventeenth day of August, 1885, a defaulter to the bank, in the sum of thirty thousand dollars. During the year 1884, and up to the time of Nichols’s death, the appellee, D. C. Martin, was a customer of the bank, and in the month of December-deposited with it the sum of one thousand eight hundred dollars, ' .- Nichols receiving it for the bank. At the time of making this, deposit, Martin requested Nichols to assist him in making a loan of this money. In January, 1885, Martin called at the bank, and was informed by Nichols, who was then occupying his-place as teller, that he had loaned one thousand five hundred dollars of the money, and at the same time exhibited to Martin a note for that amount, signed by Boaz & Battle, payable to-John Nichols or order, at appellant bank, indorsed by Nichols- and others in blank. Martin directed Nichols to hold it for collection, the understanding of Martin being that Nichols was. to hold the note in his capacity of agent of the bank. On the twenty-seventh of June, Boaz & Battle called on Nichols at the-bank and gave him a check on the Traders National Bank, payable to the order of appellant, for the sum of one thousand five hundred and eighty-three dollars and fifty cents, in payment of their note and accrued interest. This check was paid to the-bank on the twenty-ninth. Nichols received the check from Boaz & Battle, and delivered their note to them. Nichols then made a deposit check in his own name for the amount of the-check so received, and caused the same to be entered on the books of the bank to his individual credit. The bank never-accounted to appellee for this note or the one thousand five-, hundred dollars that Nichols claimed that he had advanced of appellee’s money for the note. After these transactions had occurred, appellee, not knowing of them, authorized Nichols to-extend the time of payment of the note till fall, upon payment. of the interest. Soon after this, Nichols represented to appellee that he had collected the interest and extended the time of the payment of the note. Appellee, upon the strength of these representations, drew several small drafts on the bank for the interest that he supposed had been collected on the note, which were paid by Nichols and suppressed without being reported to the bank. No officer of the bank except Nichols was informed of any of these matters; but appellee did not discover that there were irregularities about the transactions until after the death of Nichols. Upon this state of facts the court rendered judgment in favor of appellee for the amount of the note and interest.

It is no part of the business of a bank to loan money for the public or for individuals, and in the absence of proof that appellant was engaged in such business, it must be presumed that Nichols, in making the loan of appellee’s money, was acting outside of the scope of his authority as agent of the bank, and no liability would attach to the bank for the acts of Nichols in making the loan. In this case the complaint is not in reference to the making of the loan, but that the proceeds of the loan was appropriated by the bank to its own use after it had notice through Nichols that the money belonged to appellee. It is insisted, in the first place, that there is no competent evidence that the note in controversy was the property of appellee; and in the second place, it is insisted that if the note was shown to belong to appellee, that there is no evidence that appellant had notice of this fact, and that it had a right to apply the money in its possession to the credit of Nichols in payment of his defalcations. The declarations of Nichols at the time he exhibited the note to appellee were not objected to, so far as the record shows, and it must be considered by this court that no objection was made in the court below, though it is claimed in the brief of counsel that there was; and any objections that could have been made to the admission of the evidence must be held to be waived. Parties have the right to object or not, as they may see fit, to the admission of testimony that may be offered during the progress of a trial; if they fail to do so, the testimony is to be weighed by the court or jury, and such probative force should be given to it as it may be entitled to. Any other rule would lead to great confusion and uncertainty in determining causes upon appeal.

The question then is, was the evidence sufficient to satisfy a reasonable mind that the note was the property of appellee? ¡Nichols certainly knew to whom the note belonged. It was payable to his own order, and indorsed by himself in blank-The declarations of ¡Nichols were corroborated by Boaz & Battle to the extent that at the time the loan was made ¡Nichols stated to them that the money belonged to an outside party; so there can be no doubt of the sufficiency of the testimony on that point. The note about which the declaration was made then being in the possession of ¡Nichols, and payable to his order, the presumption was that it belonged to him, and for that reason the declaration was against his interest when made, and he having competent knowledge of the subject and having been shown to be dead, the evidence was admissible on this ground. (1 G-reenleaf on Evidence, p. 198, sec. 147.) At the time of these declarations appellant had no interest in the subject matter, but its claim attached long subsequent thereto.

It clearly appears from the testimony that appellee was the owner of the note, and that he delivered it to ¡Nichols as agent of the bank for collection. It was objected that ¡Nichols had no authority to receive the note for collection in behalf of the bank, his business as teller being to receive and pay out money over the counter. Let it be conceded that the duties of a teller by the rules of banking are thus limited; it was shown that ¡Nichols on other occasions had made collections for the bank. But if it had not been shown, it is a well acknowledged fact that the collection of money for others is a part of the regular business of all banks, and when a bank opens its doors for business with the public, and places officers in charge, persons dealing with them in good faith, and without any notice of any want of authority in such officer, and the act done is in the apparent scope of the officer’s authority, whether the officer was actually clothed with such authority or not, the party so dealing would be protected. (Merchants Bank v. The State Bank, 10 Wallace, 650.)

If a bank does not wish the public to deal with any particular one of its officers, at the regular place of business, in a particular line of that business, it would be its duty to so notify the public in some effectual way. The public certainly could not be expected to know, without being informed, that a person that was in the habit of daily receiving and paying out money in sums great and small had no authority to receive a note for collection, or receive the money for it when offered at the counter. It may be that no one except the bill collector was authorized to make collections in this bank, or to receive notes for collection. Still, it would be most unreasonable that an ignorant third party, who had acted in good faith, should suffer in consequence of this rule. At the time Nichols received payment of .the note in controversy he was acting for appellant, in the apparent scope of his authority, and knew to an absolute certainty that the money belonged to appellee. The knowledge of Nichols, we think, under the circumstances, must be imputed to the bank; and, having held him out to the world as worthy of confidence, it would be monstrous to allow it to profit by the frauds that he was thus enabled to perpetrate. There is no doctrine of the law better settled than that a corporation or other person is liable for the frauds of its agents, perpetrated in the scope, or apparent scope, of their authority, if the bank had have received the money without being chargeable with notice that it belonged to appellee, it might have been entitled to hold it; but such is not the case, and we think the judgment should be affirmed.

Opinion adopted May 8, 1888.

Affirmed.