National Bank v. Equitable Trust Co.

Citations

• 223 Pa. 328
• 72 A. 794
• 1909 Pa. LEXIS 536

Syllabus

<p>Principal and surety — Employee’s bond — Bookkeeper’s bond — Certificate of cashier to surety company — Banks and banking — Examination of bookkeeper’s accounts — Evidence.</p> <p>1. Where a surety company on the bond of the bookkeeper of a bank, addresses each year before the renewal of the bond, a request to the bank for information as to the bookkeeper’s conduct, and the cashier of the bank mistakenly certifies to the surety company that the bookkeeper’s accounts have been examined and found correct, that all moneys handled by him have been accounted for, and that there is no reason known to the bank why the bond should not be continued, and the bond is continued on the strength of the certificate, the bank cannot disavow the certificate of the cashier, and in an action on the bond a verdict and judgment for the surety company relieving it from liability is amply justified.</p> <p>2. Where the directors of a bank, through long usage, permit the cashier to act without their express authority, in matters in which they might lawfully authorize him to act, they cannot after such action upon his part, be heard to deny his authority, to the detriment of those who have relied upon it.</p> <p>3. The certificates made by the cashier of a bank to a surety company, the bondsman of a bookkeeper, certified that on or about their dates the books and accounts of the bookkeeper were examined and found correct in every respect. This statement was repeated from year to year at periods of the renewal of the bond. After this had been going on for several years an audit disclosed the fact that in each year during the operation of the bond large sums of money had been extracted by the bookkeeper. The method pursued was in changing upon the journal enough to cover the amount of his shortage and posting the altered amount to the general ledger, leaving the postings to the individual ledger untouched. An effective audit made at any time would have shown the shortages, and it did appea