Harriman Nat. Bank of NY v. Seldomridge

Citations

• 249 U.S. 1
• 39 S. Ct. 244
• 63 L. Ed. 443
• 1919 U.S. LEXIS 2219

Syllabus

<p>A, the cashier of the M. National Bank and in control of its .affairs, acting in the name of B, its president, by correspondence induced the H. National.Bank to agree to lend B a sum of money to be secured by the joint note of A and. B and certain collateral. A then bought certain shares from T, with a check on the M. Bank signed with B’s name, and forwarded by mail to the H. Bank a forged note and collaterals in apparent compliance with the loan agreement, upon receipt of which the H. Bank credited B with the amount agreed on; but in the meantime the check to T had been paid by the M. Bank, and A, to meet it; had made a slip falsely purporting to show a deposit there by B of a check on the H. Bank for the amount of the proposed loan. Having at first credited B with the amount of the loan, the H. Bank, under instructions sent by A in the names of the M. Bank and of B, respectively, made bookkeeping entries transferring the credit to the'M. Bank, and later, upon receiving notice from B to cancel A’s authority to act for the M. Bank, made further entries withdrawing the credit from the M. Bank’s account; and still later, upon learning that the M. Bank had failed, made additional entries to cancel the loan. B repudiated A’s action and denied liability. Held: (1) That, as against the M. Bank, the H. Bank had the right to rescind and cancel the loan agreement for failure to comply with its conditions and for the fraud; (2) that the payment of the check to T and the making of the fraudulent deposit to meet it, having occurred before the H. Bank received the note and collateral or made any entry on its books, could not subject it to liability in favor of the M. Bank; (3) that the bookkeeping entries made by the H. Bank could hot create such liability, in the absence of any consideration moving to it from the M. Bank, and in the absence of any ground for estoppel. P. 10.</p>