Merchants' National Bank of Gardner v. Clark — 54 N.Y. St. Rep. 593

Majority

p. 593

The Merchants’ National Bank of Gardner, Maine, Resp’t, v. John Clark et al., Impl’d, App’lts.^[1]

(Court of Appeals,

Filed October 3, 1893.)

Headnote

.1. Banks—Knowledge of offices.

Where it is sought* to bind a, bank by the knowledge of* its officer as to

p. 594

the fact that a note discounted was the promise of a corporation and not of the individuals who signed it, it is essential that the knowledge to he attributed to bank should have been acquired by its officer, not casually and through his individual relations to the other parties, but in an official capacity, and because of a necessity for him to inquire and to know the facts in behalf of the bank.

2. Same.

Because the president of a bank received such notes from the company of which he was a director, to be ofEered for discount by the board of his bank, he is under no obligation to state to the board what his opinion is as to the liability of the parties appearing as makers upon the notes.

3. Same—Evidence.

While evidence to show what took place at the time when notes were offered and received for discount, in order to prove knowledge by the bank of the facts, might be proper, subsequent admissions and declarations by individual directors, or other officers, would be of no effect to bind the bank, and are inadmissible.

Appeal from judgment of the supreme court, general term, second department, affirming judgment in favor of plaintiff entered upon verdict.

Henry Daily, Jr., for app’lts; Edward B. Merrill, for resp’t.

The promissory notes sued upon in this case were in the same form as was the note in the case of the Casco National Bank against the same defendants, decided at this term. The reasons given for the affirmance of the judgment in that case apply to the present. These appellants, however, claim that there was error committed by the trial court in the exclusion of evidence offered for the purpose of showing that the plaintiff knew, at the time it discounted the notes, that they were the notes of the Bidgewood Ice Company, and not the notes of these defendants.

It appears that at that time Dennis, who was a director of the Clark & Chaplin Ice Company, the payee in the notes, and which procured them to be discounted, was also the president of the plaintiff. The notes were handed to him in the company’s office. He was not examinéd, and it was not shown that he was conversant with the transaction out of which the note arose, or how it was made; but assuming that he was, his knowledge was not attributable to the plaintiff. When it is sought to prove that the plaintiff took the note knowing it to be the promise of the Bidgewood Company, and not that of the appellants, it is essential that the knowledge to be 'attributed to the plaintiff should have been acquired by its officer, not casually and through his individual relations to the other parties, but in an official capacity, and because of a necessity for him to inquire and to know the facts in behalf of the bank. That was not this case. Dennis, receiving these notes from the company of which he was a director, to be offered for discount by the board of his bank, was under no obligation to state to the board what his opinion was as to the liability of the parties appearing as maker upon the notes.

The questions which were put for the purpose of showing a knowledge by plaintiff that these were the notes of the Bidgewood Company were addressed to the defendant Close, and related to conversations had with Dennis, or with any other officer

p. 595

of the plaintiff, before the commencement of the suit, with regard to the notes. The inquiry was whether, in any of these con-versations, the witness had been told that at the. time the plaintiff received the notes it knew they were the notes of the Ridgewood Company. The exclusion of such evidence was perfectly proper. A party to a promissory note should not be permitted to invalidate his written agreement by any testimony of that hearsay nature. If the statements, sought to be elicited in the testimony, had been made to Close, they would have been quite incompetent to prejudice the rights of the bank. While evidence to show what took place at the time when the notes were offered and received for discount, in order to prove knowledge by the bank of the facts, might be proper, subsequent admissions and declarations by individual directors, or other officers, would be of no effect to bind the bank. What they may have said, not being under oath, cannot be evidence against the bank; and upon that principle, as because the statements were not made in strict relation to any agency for the bank, such evidence is inadmissible. The principle of the exclusion is the same as obtains in the ordinary relation of principal and agent. The statements of the latter are inadmissible to affect the former, unless in respect to a transaction in which he is authorized to appear for the principal, and he has no authority to bind his principal by any statements as to bygone transactions. Hearsay evidence of this character is only permissible when it relates to statements by the agent which he was authorized by his principal to make, or to statements by him which constitute part of the transaction which is at issue between the parties. 1 Morawetz on Priv. Corns., § 540a.

The judgment should be affirmed, with costs.

All concur.