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Vol. III.]

FIRST NATIONAL BANK OF CARLISLE v. GRAHAM.

[No. 11.

point, the court was asked to say, that "if the defendants were negligent, and did not exercise ordinary care, skill, and caution, to keep the plaintiff's bonds safely, then they are liable for their value, no matter how negligent they may have been in taking care of their own property." The answer was: 66 Affirmed: see general charge." The defendants had the right to complain of the manner in which the case was submitted to the jury. The standard of duty established for them was one to which they could not, under the evidence, be justly held. In the language of Judge Duncan, in Tompkins v. Saltmarsh, "they were responsible for the omission of care which even the most inattentive and thoughtless men take of their own concerns."

Upon the trial the ground was assumed by the defendants that there could be no recovery against them if the jury should find that they had taken the same care of the plaintiff's bonds that they had taken of their own securities, and complaint is now made of the failure of the court to sustain their position. In a multitude of cases, language has been used by judges which would seem to indicate the existence of the rule for which the defendants contend. Such language was employed in Foster v. The Essex Bank, 17 Mass. 479, and in the cases already referred to, of Coggs v. Bernard, Lloyd v. The West Branch Bank, and Scott v. National Bank of Chester Valley. In general, however, this view of the law has been abstractly stated; and where it has been applied, as in Lloyd v. The West Branch Bank, the diligence used by the bailee in the oversight equally of the deposit and his own property, corresponded with that diligence to which, in the circumstances of the particular bailment, the law held him bound, the authorities relied on by the defendants "do not seem," Judge Story has said, "to express the general rule in its true meaning. The depositary is bound to slight diligence only; and the measure of that diligence is that degree of diligence which persons of less than common prudence, or indeed of any prudence at all, take of their own concerns. The measure, abstractly considered, has no reference to the particular character of an individual, but it looks to the conduct and character of a whole class of persons." Story on Bailments, 564. The fact that the bailee keeps the property of the bailor with the ordinary care with which he keeps his own, does not fulfil the measure of his legal duty where the contract is one which requires strict diligence and extraordinary care. So, under a contract of bailment, in which the benefits are reciprocal, the bailee is not shielded from liability for neglect of ordinary care by proving that he has been careless, inattentive, and reckless in the management of his goods as well as those of the bailor. Cases for the application of the maxim of the Emperor Constantine, quoted in Jones on Bailments, 83, "Aliena negotia exacto officio gerunter," must constantly arise. The terms used in the authorities referred to are employed more by way of illustration than as a statement of the legal rule. That the bailee has dealt with his property and the bailor's in the same way, is a fact which may be always shown as an element in adjusting the standard of duty, and deciding the question of its performance, as well as a test of the bailee's good faith. On the proof of such a fact, a presumption of adequate diligence would ordinarily arise. But the question of the bailee's responsibility must be finally settled by a resort to the settled

Vol. III.]

FIRST NATIONAL BANK OF CARLISLE v. GRAHAM.

[No. 11.

principle which deduces the measure of his duty, in each particular bailinent, from a comparison of his conduct with the conduct not of individuals but of classes of men. The instructions of the court on this subject in the general charge were, that if the bailee "takes the same care of the goods bailed that he does of his own, that ordinarily repels the presumption of gross negligence. The desire to preserve one's own property from loss from any cause is, as a rule, so universal, that the mind rests with satisfaction on the evidence which shows the same care of the bailed property which the bailee took to save his own, unless it was shown that he was grossly negligent of both, and when this is done he is not excused but held answerable." It is conceived that these instructions were unobjectionable. Whether the defendants were guilty of such gross negligence as to make them liable was a question which, like that which was raised as to the fact of robbery, and like the other issues involved, it was for the jury, under all the evidence, exclusively to decide.

Another error is alleged to have consisted in the answer by the court to the plaintiff's seventh point, relating to the failure of the bank to give notice of the robbery, and in the direction given to the jury on the same subject in the general charge. The discussion of the point undoubtedly was unduly amplified. The limitation of the plaintiff's right to a verdict only in the event that gross negligence should be made out, was neither expressed nor implied. The instruction, in substance, was, that she could recover if injury resulted to her from the failure of the defendants to give her notice, and that she could recover for such injury, if found, even though the presumption of negligence arising from the want of notice was repelled by proof. The effect of such a direction could only be to leave the precise question on which the jury were to pass in obscurity and doubt. The plaintiff in her testimony stated that she received intelligence of the loss through her brother in Monmouth three or four weeks after it occurred. Charles H. Hepburn thought the interval between the loss and the conversation he had with the plaintiff in regard to it was only eight or ten days. From the time she received notice, if upon a fair representation of their views and motives, she acquiesced in the policy of silence which the officers of the bank had adopted, it would be unjust to permit her to set up the subsequent maintenance of that policy as a ground for the imputation of gross negligence against the defendants. But the fact that no announcement was made in the interval, whatever it was, before the plaintiff was informed of the loss, was fairly a subject for the consideration of a jury. It was for them to weigh it in connection with the other evidence, in deciding the material issues in the cause. Its relevancy and value are shown by the significance that was attached to the proof of the conduct of a bailee contempora neously with and immediately after a loss of property, in Tompkins v. Saltmarsh, supra. "I am of opinion likewise," Judge Duncan said, "that evidence ought to have been received of the hue and cry immediately after the discovery-his assiduous and indefatigable pursuit, and strict search, both at the inn and the steamboat. If he had made no complaint or inquiry, remained with his arms folded and his mouth shut, this would have afforded strong evidence of his delinquency; and though it has been said this would have been the course of a guilty man, yet it is

Vol. III.]

FIRST NATIONAL BANK OF CARLISLE v. GRAHAM.

[No. 11.

one which an innocent man would naturally take, and which, if he did not take, all would condemn him. Nothing would more strongly prove his neglect than this silence, this indifference; the jury would have drawn the most unfavorable conclusions from it." Every case must stand, of course, on its special facts. It may well be that the reasons for the action of the officers of the bank would be satisfactory to a jury, but the necessity is inevitable of submitting the question to them, whether that action involved gross neglect.

The remaining question arises out of the answer of the court to the second point of the defendants. The mere voluntary act of the cashier in receiving the plaintiff's securities would not subject the bank to liability. But if the deposit was known to the directors, and they acquiesced in its retention, a contract relation was created, by which the defendants should be held bound. The question arose in Foster v. The Essex Bank, 17 Mass. 479. That was an action to recover the value of a special deposit. The bank had no express power by charter to receive deposits of any kind, but the verdict found that the practice had been to receive them always; and Parker, C. J. said: "As the bank from the time of its incorporation has received money and other valuable things in this way, and as the practice was known to the directors, and we think must be presumed to have been known to the company, as far as a corporation can be affected with knowledge; and as the buildings and vaults of the company were allowed to be used for this purpose, and their officers employed in receiving into custody the things deposited, the corporation must be considered the depositary, and not the cashier or other officer through whose agency commodities may have been received into the bank. The rule thus stated has been uniformly applied by this court in cases involving the rights and duties of the national banks. The principle announced in the recent New York and Vermont cases of The First National Bank of Lyons v. The Ocean National Bank, and Wiley v. The First National Bank of Brattleboro', has never been adopted here, so far as it is in conflict with the rule. If the question here had grown out of an act prohibited by law, the principle of these recent authorities would be applicable, as it was applied in Fowler v. Scully, 22 P. F. Smith, 456. But the question arises out of an act which has been neither directly nor impliedly forbidden by statute. The answer of the court was accurate, and the complaint alleged against it in the supplemental assignment of error is unfounded.

VOL. III.

Judgment reversed, and a venire facias de novo awarded.

33

Vol. III.]

MARSHALL V. Cooper.

[No. 11.

COURT OF APPEALS OF MARYLAND.

(To appear in 43 Md.)

-

INSOL

EQUITABLE SET-OFF. AN ATTORNEY HAS NO LIEN ON A JUDGMENT
RECOVERED FOR CLIENT, FOR PROFESSIONAL SERVICES.
VENCY AN EQUITABLE GROUND OF SET-OFF.

MARSHALL v. COOPER. SAME v. SAME.

A judgment for $6,000 was recovered in an action of tort by U. against C. in the superior court of Baltimore city in 1871, and was affirmed by the court of appeals in 1873. Prior to the institution of that suit, namely in 1866, U. became indebted to C. in the sum of $11,000, for which, with interest thereon, C. held the promissory notes of U. secured by a deed of trust to R. conveying certain lands in Virginia. In 1868 C. instituted proceedings in equity in Virginia to enforce his claim against the property conveyed by the deed of trust. This claim was resisted by U. upon the alleged ground of fraud and usury, and by other defendants in the cause, who claimed to hold liens upon one of the parcels of land described in the deed of trust, prior and superior to the lien of C.; but the court in 1871 passed a decree in favor of C., not only against U. but also against the other defendants in the suit, and adjudged that C. was entitled to a priority of lien as against the property. From that decree the parties defendants took an appeal to the court of appeals of Virginia. U. being indebted to his attorneys, M. and F., for professional services rendered by them in the aforementioned action of tort, he having contracted, at the time of retaining them to prosecute the suit, to pay them one third of the amount which might be recovered, assigned the judgment therein recovered to them, to the extent of $2,000, being the one third thereof. U. being indebted to other persons, the said judgment was entered to their use to the extent of their respective claims; these latter uses being entered subject to the previous entry to the use of M. and F. Upon failure by C. to pay to M. and F., upon their demand, the sum of $2,000 with the costs adjudged by the court of appeals of Maryland, they caused a fieri facias to be issued out of said court in the name of U. against C., who thereupon filed his bill to restrain by injunction the enforcement of the judgment against him, until the determination of the proceedings pending in the court in Virginia, and until the mutual claims and demands of the complainant and U. should be adjusted by proper accounts to be taken between them under the direction of the court. The relief sought by the complainant was asked on the ground of an equitable set-off, the bill charging that he was precluded by the ordinary rules of law from setting up his claim against U. in the action of tort, in which the judgment was recovered. U., the judgment creditor, was utterly insolvent. Held: 1st. That the complainant was entitled to the equitable right of set-off, not only as against U. but also as against the parties to whose use the judgment was entered; and consequently entitled to be protected by injunction against the enforcement of the judgment. 2d. That, as against the equitable right of set-off, claimed by the complainant, M. and F. were not entitled to any lien upon the judgment, growing out of their contract with U., or for professional services rendered by them as attorneys in the suit.

The insolvency of a party seeking to enforce his judgment furnishes a sufficient ground for the interposition of a court of equity to enable the debtor to avail himself of a setoff.

APPEALS from the circuit court of Baltimore city.

The first appeal in this case was taken from the order of the court below, continuing the injunction previously granted, until the further order of the court; and the second was taken from the order of the said court dismissing the cross-bill of the defendants, Charles Marshall and William A. Fisher, it having been agreed that their answer to the complainant's

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bill should have the effect of, and be taken as, a cross-bill. stated in the opinion of this court.

[No. 11.

The case is

The cause was argued before Bartol, C. J., Brent, Grason, and Miller, JJ.

John Scott, Jr., for the appellants. It is settled that there can be no set-off if the debt be subject to any contingency, and the debt claimed to be due to the complainant is certainly of that character. See Chance v. Isaacs, 5 Paige N. Y. 595; Myers v. Davis, 22 N. Y. 489; Bradley v. Angel, 3 Comstock N. Y. 477, 478; Mohawk Bank v. Burrows, 6 Johns. Ch. 322; Keep v. Lord, 2 Duer (N. Y.), 81, &c. ; Ex parte Hale, 3 Vesey, 304; Dade v. Irwin, 2 Howard, 383, 390.

The complainant is not able to make out his right of equitable set-off. The doctrine of equitable set-off is outside of, and independent of the statute. Some of the precedents from our sister states may justify its extension to the unpaid balance of the complainant's claim under the circumstances of this case, but the clear weight of authority is the other way; and by Judge Ormond, of Alabama, the mistake was said to have come from their inadvertently copying decisions made under the English statutes of bankruptcy.

The right of set-off ordinarily is not a common law right, due ex debito justitiæ, but a statutory innovation. The language of the statute is the limit of the right, and where a particular claim is not embraced in its provisions, the court has no power to extend the application. This case, it must be granted, does not fall within the purview of our act, and the complainant has to resort to the ancient equitable rule on the subject. That rule, which is solely of equitable origin, was of course framed on some requirement of equity, in order to enforce a right, or to prevent a failure of justice. The principle which underlies the cases is, that when two persons are mutually indebted, and he who claims the set-off trusted, as a means of paying himself, to the debt which he owed, in such a case he has a claim to that particular fund in preference to his debtor, and perhaps to all the world. There must be what the books call not only mutual debts. but also mutual credits, which is very different from the mutual credit of the bankrupt act, which was the first English statute of set-off.

The ground of jurisdiction is the contract, express or implied, which gave the party an equitable property in the debt which he owed. He bargained for this before he would allow his creditor to run in his debt, and permitted the obligation to be incurred only on its faith and credit. He was necessarily in a very different position from one who had trusted solely to the personal credit of the debtor, and this difference of position gave him a right superior to any other, in the event that this fund was the only means of saving himself from loss. The insolvency of the party against whom the debt is to be set-off was a necessary condition; for otherwise the legal remedy was ample, without a resort to the security he had bargained for, but it is error to assert that insolvency alone is sufficient. It is just as necessary that the debt, which is claimed to be subject to the set-off, was contracted because the creditor himself owed one to which he understood he could resort. See Timms v. Shannon, 19 Md. 310, 317; Rawson v. Samuel, 1 Craig & Phil. 172, 175; Ex parte Prescott, 1 Atkyns, 231; Gordon v. Lewis, 2 Sumner, 633, 634; Howe v.

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