good faith, through lack of notice and the payment of value, or the suffering of a detriment on the faith of the act.15

§ 108. Bona fide third parties.-In the case of commercial paper or other property of the bank, whenever it comes into the hands of a third party who had no notice of the corporate officer's lack of authority, and who is a holder for value, the bank is bound by the transaction. But whenever the paper on its face shows that in the transaction there must have been a want of authority, such fact gives full notice to every one who deals with the paper,' such as drafts of a bank in favor of the president of the bank and signed by himself as president, erasing the word "cashier,"3 or postdated checks certified before they could be cashed.' And it is stated that those having notice of the officer's want of authority, where there is a want of authority, by knowing the circumstances of the act cannot claim as against the bank, if the validity of the act depends solely upon the question of power and not of ratification or authorization.

15 See the succeeding section.

1 Faneuil Bank v. Bank of Brighton, 16 Gray, 534; Phillips v. Merc. Nat. Bank, 140 N. Y, 556; Goshen Nat. Bank v. State, 141 N. Y. 379; Blair v. First Nat. Bank, 2 Flip. 111; Houghton v. First Nat. Bank, 26 Wis. 663; Central Trust Co. v. Cook Co. Nat. Bank, 15 Fed. R. 885; Farmers' Bank v. Butchers' Bank, 16 N. Y. 125. See Dime Sav. Inst. v. Allentown Bank, 65 Pa. 116.

2 Anderson v. Kissam, 35 Fed. R. 699; Clarke Nat. Bank v. Albion Bank, 52 Barb. 592; Pope v. Bank of Albion, 57 N. Y. 126. The identity of name is notice. Claflin v. Farmers' Bank, 2 Am. Law Reg. (N. S.) 92; Lee v. Smith, 84 Mo. 304. Contra, Central Trust Co. v. Cook Co. Nat. Bank, 15 Fed. R. 885. But in this latter case it might be said

that some officer had power to indorse. The case is hardly sound. See West St. Louis Bank v. Shawnee Co. Bank, 95 U. S. 557. One court puts forward the queer idea that such an indorsement is merely voidable. Preston v. Cutter, 64 N. H. 461. It is void.

3 Lamson v. Beard, 94 Fed. R. 30. 4 Clarke Nat. Bank v. Albion Bank, 52 Barb. 592.

5 Bank of E. Tenn. v. Hook, 1 Cold. 156. One case, Williams v. Dorrier, 135 Pa. 445, is decided on the basis of uti possidetis. It is partly right and partly wrong. Breyfogle v. Walsh, 71 Fed. R. 898, is rightly decided by reason of the fact that the parties knew the lack of authority. The reasons given by the court for its judgment are absurd.

§ 109. Ratification.- The bank may ratify an act which it could have authorized, and even those acts, which are ultra vires in the sense of being merely beyond the corporate power,' it may ratify. This ratification may be express, or may be implied from long acquiescence or delay in objecting, or by the retention of a benefit received under the unauthorized contract, or by insisting upon it as valid. This species of ratification is in the nature of an estoppel. Cases where the act is held authorized by a course of dealing might be called a species of ratification. But leaving out these latter cases, and considering the other instances mentioned, it is plain that in the case of an express ratification the proof can never be difficult. The action of the board of directors. or of any other officers competent to act determines the fact. In cases of implied ratification the existence of the fact is to be deduced from circumstances. A long delay or failure to object to an unauthorized act will estop the corporation, especially where the other party has altered his situation with reference to the matter. The reception of a benefit by the corporation will estop the corporation from objecting. Thus if the corporation retains the consideration received for a deed, it cannot object that the officer was unauthorized to make the deed. Even if the officer deceived

1 See § 33, ante, for many cases of Bank v. McAnulty, 31 S. W. R. 1091; this nature.

2 See § 105, ante.

3 Peninsular Bank v. Hanmer, 14 Mich. 208; Bank of Pa. v. Reed, 1 Watts & S. 101; Parker v. Donelly, 4 W. Va. 648; Kelsey v. Nat. Bank of Crawford Co., 69 Pa. 426. One case says want of objection alone not sufficient. Tifft v. Quaker City Bank, 8 Pa. Co. Ct. R. 606. But that is not an accurate statement.

4 Peninsular Bank v. Hanmer, 14 Mich. 208; Tradesmen's Nat. Bank v. Bank of Commerce, 39 N. Y. Supp. 554; Goldbeck v. Kensington Nat. Bank, 147 Pa. 267; Merchants' Nat.

Bank of New London v. Ketcham, 64 Wis. 7; Johnston-Fife Hat Co. v. National Bank, 4 Okl. 17, where the bank received the benefit of a swindling conspiracy; Manhattan Life Ins. Co. v. Farmers' Bank, 10 Blatch. 344; Hughes v. First Nat. Bank, 110 Pa. 428; Owens v. Stapp, 32 Ill. App. 653; Johnston v. Southwestern Bank, 3 Strob. Eq. 263; Cutting v. Marlor, 78 N. Y. 454; Hawkins v. Fourth Nat. Bank, 49 N. E. R. 957.

5 Akers v. Ray Co. Bank, 63 Mo. App. 316.

the bank, and the bank retains the benefit of his act, it is liable for the act as authorized. For although ratification must be with knowledge, yet where it retains a benefit it will not be heard to say it had not knowledge. Where a bank receives and keeps the sum or consideration paid for an extension of payment on its claim, it ratifies the extension though unauthorized. So where the bank retains the money derived from the unauthorized pledge of another corporation's securities, it must answer to that corporation for the securities. On the same principle, if the corporation attempts to enforce an unauthorized contract, it binds itself to the contract.10 It cannot approbate and reprobate in the same breath. If the bank protests a draft received for collection, it ratifies the receipt for collection." It was held in the case of a town treasurer, who was also cashier of a bank, and who drew a note as town treasurer and signed it as such, but discounted it to his bank for his own individual profit, that the bank by bringing suit on the note ratified its cashier's fraud.12 Whenever a ratification is shown in this manner it amounts to a prior authority. There are other cases which may be called cases of ratification. Thus a cashier pledged bonds of the customer deposited for safe keeping with the bank. The pledge was for the benefit of the bank and the pledgee acted in good faith. The cashier afterwards got the bonds back by a fraud, and it was held that the bank could not object to the pledgee's title while

6 Kennedy v. First Nat. Bank, Fed. Cas. No. 7701a.

13

v. Sharp, 4 Smedes & M. 75; Le Grande Nat. Bank v. Blum, 27 Oreg.

7 Western Nat. Bank v. Arm- 215. strong, 152 U. S. 346.

11 Averell v. Second Nat. Bank, 6

8 Perkins v. Bank of La., 5 La. Mackey, 358. Ann. 222.

9 Fishkill Sav. Inst. v. Bostwick, 80 N. Y. 162. It cannot deny an officer's authority to make a loan for it, where it receives the money upon the loan. Blanchard v. Commercial Bank, 75 Fed. R. 249.

10 Wilson v. Pauly, 72 Fed. R. 129, 37 U. S. App. 642; Planters' Bank

12 First Nat. Bank v. Milford, 36 Conn. 93. This case is put on the wrong ground. The cashier alone acted for both parties. The bank had notice of the lack of authority of town treasurer. See note 3, § 106, ante.

13 See preceding note.

it retained the bonds and ratified the cashier's fraud.14 Two cases that are at first glance irreconcilable decide the effect of a cashier's act in receiving money into the bank and then wrongfully passing it out. Thus the president of a bank discounted his notes to another bank, claiming that his bank would not pay the notes. The money was deposited with his bank to the president's credit. It was held that the bank was not liable for the loan, as there was no evidence that it retained the proceeds. It was simply the medium of transference.15 In the other case the vice-president made a loan in the bank's name and the money was put to the bank's credit and the cashier notified. The vice-president thereupon caused the cashier to put the money to his (the vice-president's) credit, and he used the money for private purposes. It was held that the bank having received the money was liable.16 A yet different case was caused by the astute operation of a couple of tellers and a broker. The paying teller of the first bank was short in his accounts. A complaisant broker drew a check on the first bank. The paying teller marked it good. Then the broker took the check to the teller of a second bank, who cashed it. The broker took the money to the paying teller of the first bank, who deposited it amongst his cash. It was held that the second bank could recover the money from the first bank The first bank by retaining the money ratified the fraud.17

The general rule

§ 110. Admissions of bank officers. is that the admission of an agent while he is acting within the scope of his authority and in regard to a matter then depending, or, as it is expressed, dum fervet opus, is binding upon his principal. An admission that is merely a state

14 Ringling v. Kohn, 4 Mo. App. 59. 15 First Nat. Bank v. Hanover Nat. Bank, 66 Fed. R. 34, 13 C. C. A. 313. Compare Western Nat. Bank v. Armstrong, 152 U. S. 346.

16 Stewart v. Armstrong, 56 Fed. R. 167.

Bank, 10 Gray, 532. Accord, Skinner v. Merchants' Bank, 4 Allen, 290. Contra, Bank of Charleston v. State Bank, 13 Rich. Law, 291, an indefensible ruling.

1 Another statement of the rule which amounts to the same thing

17 Atlantic Bank v. Merchants' is that the admission must be a

ment or narration of a past occurrence is not admissible, because the agent is not authorized to make admissions of that character. But if the agent has authority to act about a particular matter, his statements made while acting as agent in regard to the matter are binding upon the bank, whether the statements are an admission as to a past or a present occurrence. It must be shown that the declaration was in regard to a matter within the legal sphere of action of the corporate agent. It is upon this ground, perhaps, that it has been held that the admission of the genuineness of an indorsement by the bank teller is not binding upon the bank; and the admission by a single director not authorized to act for the bank has been held not to be binding upon the bank. In one case of doubtful authority it has been held that a bank cashier who rented premises for the bank did not bind the bank by admissions as to the purpose of the bank in renting the premises, or as to the terms of a previous renting. It would seem, too, that the statement sought to be considered an admission must have been made to the party relying upon it, or to some one for him; s but this statement is not entirely free from doubt. Stockholders are not authorized merely in their capacity as stockpart of the res gesta. Railroad to a signature of a drawer of a Co. v. O'Brien, 119 U. S. 99; Idaho check. Forwarding Co. v. Insurance Co., 8 Utah, 41. Courts sometimes stretch the rule as to what is a part of the res gestæ to an unwarranted length. See Huffcutt on Agency, secs. 136-139.

6 East River Bank v. Hoyt, 41 Barb. 441.

7 Union Banking Co. v. Gillings, 45 Md. 181. Compare Merchants' Bank v. Marine Bank, 3 Gill, 96. 84 Thompson on Corp., sec. 4918;

2 Franklin Bank v. Steward, 37 Carrol v. Railroad Co., 82 Ga. 452. Me. 519.

3 Morse v. Railroad Co., 6 Gray, 450; Malecek v. Tower Grove R. R. Co., 57 Mo. 17.

4 Wyman v. Hallowell Bank, 14 Mass. 58; Salem Bank v. Gloucester Bank, 17 Mass. 21.

5 Walker v. St. Louis Nat. Bank, 5 Mo. App. 214. But the principle

of the decision could not be applied

8

9 Keysor v. Railroad Co., 66 Mich. 390; but this case is so confused that the reporter of the court despaired of a syllabus. See also Linderberg v. Crescent Mining Co., 9 Utah, 163, which case was a most laughable judicial aberration, and is now overruled. People v. Kessler, 13 Utah, 69.