Carr v. . Nat. Bank and Loan Co.

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The unanimous affirmance by the Appellate Division of the judgment, which was awarded to the plaintiff by the trial court, conclusively establishes all the foregoing facts and the legal question is whether they warranted the conclusion that the plaintiff was entitled to disaffirm the sales of the bonds to her. The appellant argues that the facts did not establish any actual fraud on the part of the defendant. But that was not essential to the granting of the relief which plaintiff demanded. There was shown to have been such a condition of things, in the situation of the parties and in the ignorance in which the plaintiff was kept of material facts, by ways of suppression, or of misrepresentation, as, in equity, to warrant her in wholly repudiating the transaction. It is quite immaterial that there may have been no intention to actually defraud. (Hammond v. Pennock, 61 N.Y. 145.) The plaintiff supposed that she had enlisted the disinterested services of Sherman in the investment of her moneys, and, relying upon what he told her, confided them to him; whereas, in fact, he was acting for the bank, of which he was president and manager, in disposing, at a profit, of a series of securities, which it had acquired. He was acting for the defendant as a seller of the bonds and for the plaintiff as an intending purchaser, and a fraudulent motive was not necessary to be proved, either on the defendant's part, or on that of the common agent, for, in the view of a court of equity, there was such fraud in law as to make the contract a voidable one, at the election of the plaintiff. The plaintiff has been made to suffer her loss through misplaced confidence in one whom she believed to be devoted to her interests, while, at the time, he was acting for the defendant's, and the legal theory of her right to equitable relief, by the way of rescission, rests upon the basis that Sherman undertook to act as the agent of both parties in a matter where their interests were, for obvious reasons, to be regarded as conflicting. In such cases equity will, upon the seasonable application of a party, avoid the transaction and this right is conceded, without reference to any actual fraud. A binding transaction requires the free and conscious action of the party's mind upon its subject. The general equitable doctrine should be regarded as well settled. (Story on Agency, § 31; Copeland v. Ins. Co., 6 Pick. 198;New — York Central Ins. Co. v. National Protection Ins. Co., 14 N.Y. 85; Conkey v. Bond, 36 ib. 427;Murray v. Beard, 102 ib. 505; E.S. Ins. Co. v. A.C. Ins.Co., 138 ib. 446.) There is no question but that plaintiff acted promptly upon her discovery of how Sherman had acted, in tendering back, at once, the bonds to the defendant, in disaffirmance of the transaction.

The appellant argues that what Sherman did was his individual act, for which it should not be held responsible; and, further, that as it could not, being a national bank, engage in the business of buying and selling securities, its officers could not subject it to any liability by reason of such transactions. It is sufficient to say, in answer to that objection, that the plaintiff did not know that she was dealing with the defendant through Sherman as one of its officers, and that, whatever the limitations upon its powers, they cannot interfere with the just operation of the rule in equity, which forbids a principal from reaping any benefit from the wrongful act of his agent. (Gould v. Cayuga County Nat. Bank, 86 N.Y. 75.) No such extraordinary immunity was conferred upon national banks. Then, it is to be observed that the effect of the plaintiff's action is, simply, by avoiding the whole transaction into which she was falsely led by defendant's agent, to place the parties in the same position as they were in before it occurred.

The question of ultra vires, which defendant raises, has no place in the case. The plaintiff did not know the defendant in the transaction, and she is not seeking to avail herself of anything that Sherman did for it. She asks to be restored to the possession of her property, of which she was unfairly deprived to the defendant's advantage, through its agent's misconduct, and upon the plainest principles of equity she was entitled to her judgment.

The judgment should be affirmed, with costs.

PARKER, Ch. J., BARTLETT, HAIGHT, MARTIN, VANN and WERNER, JJ., concur.

Judgment affirmed.