bound on an accommodation indorsement made by the agent in his name, in the general scope of agency, to a bona fide holder without notice.1

An agent may be called as witness to prove his agency, but his declarations are not admissible evidence against the alleged principal until the fact of agency is established."

The principle that the transferrer of a negotiable instrument warrants its genuineness extends to transfers by an agent, unless he discloses his agency, and also the name of the principal. Otherwise, if the bill or note which he transfers be forged, in which case he will be bound.

§ 285. Infirmity of principal's title affects agent.—If a man hold a bill or note as agent of another, and the circumstances be such that the principal can not recover, the infirmity of the principal's titles infects his also, and he can not recover. Thus M. & Co. remitted to the plaintiff in London a Bank of England note for £500, stating that they would at a future day draw for the amount. The plaintiff presented it for payment, but the bank detained it, on the ground that it had been obtained by means of a forged draft from a previous holder. In a suit by the plaintiff against the bank, it was held that the plaintiff was identified with his principals, and there being no evidence that they had given full value, he could not recover.5

286. For what acts principal not bound.—A principal is not bound for the criminal acts of his agent, unless he participates in them, or has been guilty of gross negligence. Thus, where a bank clerk, or cashier, embezzles a special deposit in the bank, the bank is not liable, as this is not its act, unless it had complicity in the wrong, or was grossly negligent."

'Edward v. Thomas, 66 Mo., 467.

'Nat. Mechanics' Bank v. Nat. Bank, 36 Md., 5; Streeter v. Poor, 4 Kan., 412; Poore v. Magruder, 24 Grat., 200; 1 Phillips on Ev. [*515], note, 144.

'Lyons v. Miller, 6 Grat., 440; Merriam v. Walcott, 3 Allen, 258. See § 740%.

'Lee v. Zagury, 8 Taunt., 1144; Byles [*391].

'Solomons v. Bank of England, 13 East., 235; 1 Rose, 99. 'Sturges v. Keith, 57 Ill., 454.

286a. Liability for special deposits.-Whether or not

a bank receiving bonds or other securities for keeping on special deposit is liable in trover to the owner in the event of their being stolen while in its possession, is a much debated question. Like other bailees, if the bailment be gratuitous, the bank will not be liable unless the loss be occasioned by its gross negligence. This is conceded.1 But whether it is liable at all is a matter about which the decisions are in conflict. By some the view is taken that the receipt of securities, or valuables of any kind, on special deposit, is ultra vires of the ordinary business of banking, and that the bank will not be bound. By others, that such transactions have become by usage part of the duty or business of a bank, and belongs to the very nature of such an institution. In New York the latter view obtains, and has been recently applied to hold a national bank liable, it being considered that such a bank has the incidental power to receive special deposits gratuitously or otherwise, though it is not within the enumerated powers conferred by statute." And as said by the U. S. Supreme Court, it may now be considered as settled that if a bank be accustomed to take such deposits, and the fact is known and acquiesced in by the directors, there is the same liability upon it for loss of

3

1 Scott v. National Bank, 72 Penn. St., 471; Foster v. Essex Bank, 17 Mass., 479; Pattison v. Syracuse National Bank, 80 N. Y., 83; Chattahoochee National Bank, 58 Ga., 369.

2 Wiley v. First National Bank, 47 Vt., 546; Whitney v. First National Bank, 50 Vt., 389; Third National Bank v. Boyd, 44 Mo., 47; First National Bank v. Ocean National Bank, 60 N. Y., 278. This view was taken in the last edition of this work, but the decision of the U. S. Supreme Court cited below and concurring authorities have induced a change of the text.

Foster v. Essex Bank, 17 Mass., 479; Pattison v. Syracuse National Bank, So N. Y., 82; Chattahoochee National Bank v. Schley, 58 Ga., 369, where it is said: "By habitually receiving through its cashier special deposits to be kept gratuitously for mere accommodation, a national bank will incur liability for gross negligence in respect to any such deposits received in the usual way." Turner v. First National Bank, 26 Iowa, 562; Smith v. First National Bank, 99 Mass., 605; Lancaster County National Bank v. Smith, 62 Penn. St., 47, distinguished from Scott v. National Bank, 72 Penn. St., 471, where no negligence was shown. First National Bank v. Graham, 79 Penn. St., 106, no negligence shown.

⚫ Pattison v. Syracuse National Bank, 80 N. Y., 83. See other cases supra.

the deposit occasioned by its gross negligence as if the deposit had been authorized by the terms of its charter.1

§ 287. Losses occasioned by fraud or failure of third parties, to whom an agent has given credit, pursuant to the regular and accustomed practice of trade, are not chargeable upon him. And, therefore, where the receiver of Lord Plymouth's estate took bills in the country of persons who at the time were reputed to be of credit and substance, in order to return the rents in London, and the bills were dishonored and the money lost, the receiver was excused. And where remittance is made by post, according to instructions, in the usual way of business, the party making it is not liable for any resulting loss.5

A signature by an agent with authority satisfies the allegation of signature by the party's own hand.

$288. Presumed continuance of general authority.-A general authority to an agent is presumed to continue until its revocation is generally known. Therefore (to use the language of Chitty), after the discharge of a clerk or agent usually employed to draw, accept, qr indorse bills or notes, the employer will be bound by his signature, made after the determination of his authority, until the discharge be gener ally known. And if A. permit B. to draw bills in his name, he will be liable as drawer to ignorant indorsees, although he had no interest, nor knew of the particular bills drawn in fraud of him by B., though he will not be liable to a payee, who had knowledge of the impropriety of the transaction.8

National Bank v. Graham, 100 U. S. (10 Otto), 702.

1

Knight v. Lord Plymouth, 2 Atk., 480.

'National Bank of Bellefonte v. McManigle, 69 Penn. St., 156.

Warwick v. Noakes, Peake N. P., 68.

Porter v. Cumings, 7 Wend., 172; Pease v. Morgan, 7 Johns, 468; Booth v. Grove, Moody & M., 182; 3 Car. & P., 335; Helmsley v. Loader, 2 Camp., 450, Jones v. Mars, 2 Camp., 306 (overruling Levy v. Wilson, 5 Esp., 180).

7

W Chitty on Bills (13 Am. ed.), [*32], 42; Story on Agency, §§ 470, 473 Anon. v. Harrison, 12 Mod., 346.

Smith v. Stranger, Peake Add., 116; Chitty [*32], 42.

§ 288a. Revocation of authority, and limitation.-When, therefore, the authority of such an agent has been determined, or he has been discharged from his employer, and there is reason to apprehend that he will circulate bills in his employer's name, it is advisable for the latter to give notice of the determination of the agent's authority through the public press, and also to all his correspondents individually—notice in the public press not being in general suffi cient to affect a former customer, unless he has had express notice thereof.1 A different rule applies as to special and limited agencies. When their authority terminates by its own limitation the agents can no longer bind their principals. Thus, where plaintiff being about to leave home, deposited a power of attorney with his bank, authorizing his clerk to draw checks on his account for fifteen days, and after that time the clerk continued to draw checks, and used the money for his own purposes, it was held that the loss should fall on the bank, and that the principal was not bound after the fifteen days, as to checks so drawn. The fact that the checks had been returned in the principal's bank book, did not bind him by acquiescence, or estoppel, because the check drawer was his cashier, and the fact that he had drawn the checks after expiration of his authority was not discovered by the principal.2

8

Death operates as revocation of all agencies not coupled with an interest vested in the agent; but war between the countries of the principal and the agent does not.*

SECTION II.

IMPLIED AUTHORITY OF AGENT.

§ 289. In the second place, as to the implied authority of

an agent to bind his principal: such authority may fre

2 Manufacturers' National Bank v. Barnes, 65 Ill., 69; see Weiser v. Denison,

3

I Parsons on Contracts, 71.

IO N. Y., 68.

See ante, chapter VIII, Sec. 2; § 222.

quently be inferred from the circumstances of the case. Thus if the principal stand by and tacitly concur in the act of the agent signing his name, he would be as strictly bound as if he had expressly authorized the agent so to do. So authority may be implied from the course of business, and employment, or from repeated recognitions by the principal of the agent's authority. The circumstances which give rise to the implication of authority are for the jury to consider; and the jury will be warranted in holding the principal liable if they produce a strong and reasonable belief that authority existed.

§ 290. Construction of authority to bind principal in a certain character.-The authority to bind the principal in a certain character on a negotiable instrument can not be construed as an authority to make the principal a party in any other character. Thus authority to draw a bill is not of itself authority to indorse one;1 nor to accept one; nor does authority to indorse imply authority to accept a bill;3 nor to make a several or joint note. So it has been considered that authority to draw a bill upon the principal does not imply authority to the agent to draw in his own name; and that the principal would not be estopped from refusing payment by having paid previously a bill so drawn."

But under certain circumstances authority to bind the principal in one form might be evidence throwing light on the question of authority to bind him in another. "It may be admitted," said Tindal, C. J., in a case quoted elsewhere in the text, "that an authority to draw does not import in itself an authority to indorse bills; but still the evidence of

'Robinson v. Yarrow, 7 Taunt., 455; Murray v. East India Co., 5 B. & Ald., 204. Power to school directors to issue bonds does not authorize issue of notes. School District v. Sippy, 54 Ill., 287; Bank of Deer Lodge v. Hope Mining Co., 3 Montana, 146.

Attwood v. Munnings, 7 B. & C., 278; Sewanee Mining Co. v. McCall, 3 Head., 621; Bank of Deer Lodge v. Hope Mining Co., 3 Montana, 146.

Bank of Deer Lodge v. Hope Mining Co., 3 Montana, 146.

VOL. I.-18