Bank of Wilmington v. Wollaston — 3 Del. 90

Majority

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THE BANK OF WILMINGTON AND BRANDYWINE vs. JOSEPH P. WOLLASTON.

Headnote

The by-laws of a corporation are evidence against its officers, though they be not rnezn-bers of the corporation.

Acts incorporating banks, turnpike companies, &c., though not strictly public laws, but being published‘as such, are evidenced by the statute book.

Estoppels in pais, though not pleadable may operate as a bar, under the direction of the court to the jury.

The principle of estoppels in pais is this: a party is estopped to deny his own acts and admissions, which were expressly designed to influence the conduct of another, and did so influence it, when such denial will operate to the injury of the latter.

The bond of an officer of a corporation is not ^fleeted by an increase of its capital merely.

The limitation of suits on such bonds is two years from the accruing of the cause of action; and in case of a deficit the act would begin to run, not from the time funds were actually withdrawn, but from the time the officer faiicd'to pay them over, according to his bond.

This was an action on the official bond of the cashier of the Bank

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of Wilmington and Brandywine, dated 4th May, 1833, to recover a deficit in the funds of the bank to the amount of $4,534 09. The condition of the bond was that W ollaston, (wbo had been duly chosen cashier) should from time to time, and at all times during his continuance in said office and whilst he should he employed as cashier in said bank “make and deliver just and true accounts of, and pay and deliver to the president, directors and company of said bank, all sums of money, &c., funds, &c., which he should receive or which should come to his hands belonging to said bank, or for which said bank should be responsible; and should in all things well and truly perform his duties, and honestly and diligently discharge his trust as cashier of the said bank.”

The declaration contained seven breaches, the principal one of which was the non-payment of the funds received. The pleas were non est factum and a general traverse to each of the counts; and the act of limitation.

The Bank of Wilmington and Brandywine is incorporated, and the act of incorporation with several supplements to it, is published with-the State laws.

The by-laws of the bank, made under the authority of the charter, were offered in evidence and objected to as not binding on the defendant, who was not a corporator, and had no vote in establishing them.

The Court. — Corporations make known their will by by-laws. This corporation is authorized by section 6 of its charter, to make by-laws for its own government and, of course, for the government of its officers. Section 16 requires the cashier to give bond, and to perform all the duties of his station; and his first duty is to learn what those duties are, as prescribed by the by-laws. Without controverting any principle that makes these by-laws inoperative as to strangers to the corporation, we hold them to be evidence to show, the liability of an officer to the corporation, whose duties are prescribed by the by-laws, and to which he has access.

There was a general count of the funds of the bank on 24th November, 1834. The amount of cash then on hand was entered on the settlement book by Mr. Wollaston. The vault funds were kept in bags and bundles, with labels showing the amount in each; when any was added or taken away a note was made on the labels, and on the settlement book. The drawer funds were counted daily. These entries in the settlement book were regularly made in the handwriting of Wollaston, with a very few exceptions, when they were made by one of the tellers. The entry showing the amount of funds on

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4th October, 1837, was made by Wollaston, those of the 7th and 9th by Sparks, the teller and subsequent cashier. The cashier kept the key of the vault. Wollaston resigned on the 9th October. On the 4th the vault funds were stated on the settlement book, in his handwriting, to be $71,113 00. Sparks was appointed cashier on the 9th; and took up the same entry and continued it, in his handwriting, with such additions or deductions as the business required, until the 19th October, when there was another general count by the directors, and a deficit discovered of $4,500 in the vault funds, and $34 09 in the drawer funds. Both the cashiers were men of high character for integrity: and neither the time nor the mode of the deficiency could be ascertained.

Mr. Sparks was called as a witness, first without, and afterwards under a release; and testified in substance as follows: — “Was teller in the bank. The cashier had charge of the funds; the vault funds were in packages of $10,000: small amounts of notes and specie were kept in the drawer; the cashier sometimes left the key of the vault with me; he counted the cash daily (other than vault funds;) he made the entries of the settlement book, which alone showed the vault funds; such entries as are in my handwriting whilst teller were made by his direction, as he counted the money. Wollaston went to Philadelphia on the 5th and returned on the (5th of October. I was left in charge as usual. He did business in the bank as cashier on the 6th and 7th. The 8th was Sunday. On Monday the 9th, I was appointed cashier; from that time the key was in my official possession; when I went to dinner I left it in a desk in the bank; from the 9th to the 19th there was no money taken out of the vault, to my knowledge, but on two occasions which are noted on the settlement book: on the 16th or 17th, I discovered that a bundle in the vault, which ought to have contained $10,000, was labelled for only $5,000. I called the board together, and notified Mr. Wollaston; on the 19th there was a count, and the deficiency was discovered. I took up the amount appearing on the settlement book on the 6th October, viz: $71,113, and carried it forward daily, with but two deductions of $10,000 each, until the 19th, when it stood at $51,113; until the deficit was discovered.

The plaintiffs having closed, defendant’s counsel moved a nonsuit: 1st. Because there was not legal proof of the existence of the corporation. The actbeing a private one, was notproved by the printed statute book. (JLng. & Ames 377; 19 Johns. Rep. 300 ; 1 Stark. Ev. 170, [196;] S Wended Rep. 480.) 2d. The plaintiffs having placed the hank

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funds in the hands of Sparks on the 9th October uncounted, and he having by repeated entries on!the settlement book, subsequently stated’ them at $71,113, this was an admission that they wei’e all right, and an estoppel in pais to say the contrary. The bank was estoped by its own act to deny the correctness of the vault funds. ( 8 Wend. Rep. 483 ; 1 Saund. PI. & Ev. 53; 2 Stark. Ev. 18.) 3d. If plaintiffs had shown themselves incorporated; they had also shown that by a supplement passed after the date of this cashier’s bond, their capital was increased $90,00; that the bond did not apply to this increased capital; and plaintiffs could not recover, unless they could show that the deficit accrued before this increase. 4th. And in any event the plaintiffs must be nonsuited,, because they had not proved that the defalcation arose within two years before the action commenced, which is the limitation to such bonds as this. (Digest 398, s. 8; 2 Stark. Ev. 475; 1 Barn. & Eld. 92; Chitty Cont. 637-8, n. 1; 20 Johns. Rep. 33 ; 5 Eng. Com. Law. Rep. 403; 2 Barn. & Cres. 156.

This motion was argued at length by J. A. Bayard and J. M. Clayton, in support of it; and Rogers, jr. and Wales, in opposition. They cited on the first point, Digest 31-2, 69, 497; 2 Del. Laics-1064; 4 ib. 528, s. 8; 6 ib. 22; Bull. jY. P. 224; 4 Crunch 388; 6 Bin. 321 and 8 Del. Laws 14 ; on the second point, 8 Wend. Rep. 483 ; Co. Litt. 352, a.; on the fourth, Chit. Cont. 636.

By the Court:

A motion for a nonsuit has been made in this case upon four different grounds, which the court will now proceed to consider.

The first ground is, that there is no legal proof of the existence of the corporation. The proof adduced of this fact consists of the printed volumes of the laws published in the mode directed by the laws of'the State, and in which the original charter of the bank and the various supplements are published at large. It is contended that this charter and its supplements are private laws, and should be proved either by sworn copies or exemplifications under the great seal. In England such is the general rule; but in an anonymous case in 2 Salk. 566, Holt says, that an act printed by the king’s printer was always good evidence before a jury, although upon nul tiel record pleaded, such printed copy was not evidence, but there should be an exemplification. ’The laws of this State are printed and published under the inspection of the Secretary of State; to whom every law, passed during any session of the Legislature is delivered by the

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speakers,’ and it is made bis duty to publish such of them as are of a •public nature; and to collate with, and correct by the original rolls, the proof sheets of the printed copies. (2 ml. Laws Del. 1064; Dig. 497.) The requisition of the law is not confined to the publication of the public laws strictly speaking, but directs that of the laws of a public nature. In conformity with this provision the Secretary of State has, from the organization of the government to this day, published the acts incorporating colleges, banks and turnpike companies. Such publication must have been designed to make them evidence in the usual exigencies of the affairs of society. This design of the Legislature is further manifested by the provisions of the “Act directing a new edition of the laws,” (Digest 31,) which direct that “all prioate acts shall be omitted,” and immediately afterwards provides, that acts incorporating colleges, academies and schools; banks, turnpikes and other companies, may be omitted; but of these acts which have been printed among the laws, a statement shall be made of such matters as shall be deemed of public concern: and then, by a subsequent act concerning this revised edition, (vol 8, 14,) declares that such statement shall be admissible in evidence. It would be preposterous to say that the statement should be evidence, and that the printed act at large was not. It is true, that in pleading the courts notice only the public acts strictly speaking; and that such acts which we have just referred to, although of a public nature, must be pleaded; and it may be that, upon the plea of mil tiel record, we might require an exemplification to sustain the proferí, but we are clearly of opinion that the printed acts are evidence before the jury.

The second ground is, that the plaintiffs received the funds and placed them in the hands of a third person without counting, and are now estopped to say that the statement left by the defendant is not true. The facts are, that the defendant in making up his settlement book on the 4th October 1837, stated in his memorandum that there were in the vault of the bank $71,113: and he ceased from that time to perform his duties as cashier. The teller, who lived in the same house with him, took possession of the funds of the bank, and performed his duties on the 5th, 6th and 7th of October, without counting the funds in the vault; but, assuming the memorandum of the defendant to be true, made up his daily settlement, and set down the funds in the vault to be $71,113. On the 9th of October, the board of directors vacated the appointment of the defendant, and elected the teller cashier in his place, thus clothing him with the legal and resporisiblc charge of the funds of the bank. The new cashier, with

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out counting the funds, continued-upon the faith of the memorandum of the defendant to make up his daily settlement book, and to state the funds in the vault to be as stated by the defendant, with the exception of two packages of notes which were taken out for the use of the bank, until the 19th of October, when upon his suggestion, the funds in the vault were counted, and it was ascertained that there was a deficiency of $4,500. These facts are relied upon as being an admission on the part of the plaintiffs, that there were $71,113 in the vault when the defendant ceased to have .the charge of the funds and to act as cashier; and to be such an admission as estopps them from showing the contrary. Estoppels in pais, though they cannot be pleaded, but are given in evidence to the court and jury, yet may operate under the direction of the court as effectually as a technical estoppel, and must depend on the circumstances of the case. The general rule applicable to them is, that “a party will be concluded from denying his own acts and admissions, which were expressly designed to influence the conduct of another, and did so influence it when such denial will operate to the injury of the latter.” The rule is so laid down in 8 Wend. 483 , Welland Canal Co. vs. Hathaway.

The principle is, that it would be against good conscience and honest dealing to obtain such unfair advantage; and the rule assumes it to be true, that the party has been injluenced in his conduct and injured by it. If a cashier or other officer upon going out of office should demand, upon surrendering his trust, an acknowledgment of the delivery of what he surrendered, and such acknowledgment was made, the party making it would be estopped from showing the truth, because he has injluenced the conduct of the officer, and induced him to waive the proof which he had it in his power to obtain, and the subsequent denial would operate to his injury in that particular. But is such the case in this instance? Did the defendant ask a count, or any acknowledgment of the correctness of his memorandum of the funds in the vault? Was his conduct in any way influenced by the memorandum of Mr. Sparks as teller, or in his subsequent character as cashier? If not, then although his proof may be more difficult, yet that circumstance alone, which results from his own conduct cannot estop the plaintiffs from showing the truth, since it was not the result of the acts or admissions of the plaintiffs or their agent, nor designed by them to be so. We are.decidedly of opinion that the circumstances relied upon are no estoppel, but are matters of evidence and discussion before the jury.

The third ground is, that the capital having been enlarged by the

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act of 1837, there was a corresponding enlargement of the duties of the cashier; and that, the bohd having been given before this act, is not obligatory upon the defendant. The simple answer to this proposition is that there was no enlargement of the duties of the officer. The sphere of his duties was the same, although the subject matter of his charge might be increased, which is no more than what happens from day to day from fluctuations in the amount of deposites.

IVales, Rogers and Rogers, jr., for the plaintiffs.

Bayard and Clayton, for defendant.

The fourth ground is, that the cause of action is not proved to have arisen within two years, the period of limitation by the act of assembly. The defendant is bound by his obligation to make and give full'satisfaction and recompense to the plaintiffs for all monies, bills, notes and effects which shall come to his hands. If he did not deliver the funds to the plaintiffs upon his quitting his office, then there was a breach of the obligation and the cause of action arose; and that breach is the very point in issue, and which is to be tried by the jury.

The case went on before the jury, and resulted in a verdict for the defendant.