Bater v. Dresser, 251 U.S. 524 (1920)

Bater v. Dresser

Nos. 155-158

Argued January 19, 20, 1920
Decided March 1, 1920
251 U.S. 524

APPEALS FROM THE CIRCUIT COURT OF APPEALS

FOR THE FIRST CIRCUIT

Syllabus

The degree of care required of director of a national bank depends upon the subject to which it i to be applied, and each case is to be determined in view of all the circumstance. P. 529. Briggs v. Spaulding, 141 U.S. 132.

The bookkeeper of a national bank during a series of years defrauded it of an amount aggregating more than its capital and more than the normal average amount of its deposit by a novel scheme involving exchanges of his personal checks on the bank for checks of an outsider on another bank, cashing of the checks outside, abstraction by the bookkeeper of his own checks when returned to his bank with clearing-house statements which were settled by the cashier, and falsification of the deposit ledger, kept by the bookkeeper, so a to conceal the transaction by false charges against deposits and false additions of the total, diminishing the apparent liability to depositor. The fraud could have been discovered by the cashier if he had himself taken and examined checks as they came from the clearing house or had carefully examined the multitudinous figures of the deposit ledger or called in and compared with it the depositors’ pass books, but he negligently over-trusted the bookkeeper and made his statements to the directors accordingly. Semi-annual examinations by national bank examiners revealed nothing wrong, and wrong was not suspected, the seeming shrinkage of deposits being attributed to innocent causes.

Held:

(1) That directors, serving gratuitously, who were without knowledge of the cashier’s negligence or of the possibility of such a fraud, and who had assurance from the president, as from the bank examiners’ reports, were not negligent in accepting the cashier’s statements of liabilities, like his statements of assets, which always were correct, and were not bound to inspect the depositors’ ledger or call in the pass-books and compare them with it, although there was a bylaw, nearly obsolete, calling for examinations by a committee semiannually. P. 529.

(2) That the president, who, beside being a large depositor, was habitually at the bank, in control of its affairs, with immediate access to the depositors’ ledger, and who had received certain warnings that the bookkeeper was living fast and dealing in stocks, was guilty of negligence in failing to make an examination. P. 530.

One who accepts the presidency of a national bank accepts responsibility for any losses the bank may suffer through his fault. P. 531.

Interest upon the amount of a decree for such damages may be awarded as a matter of discretion, not of right. Id.

Interest allowed in this case from the date of the decree in the district court until the date when the judgment creditor (receiver of the bank) interposed delay by appealing to this Court. Id.

250 F. 525 modified and affirmed.

The case is stated in the opinion.