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THIRD NATIONAL BANK OF BALTIMORE v. Boyd.
ure, subject to such rights as had already accrued under it. The appellant had as much right to deliver the collaterals as the appellee had to demand them. So long as neither of them exercised that right, they were held under the original contract. The appellant recognized the distinction between them and similar property held by it as a gratuitous bailee. It required all of its customers to remove boxes and valuables which they had left with it for their own accommodation and security merely, but retained the property in question, as collaterals, under the original agreement, and so held them at the time they were stolen. Either party to a tenancy at will may terminate it. But until it is terminated; both of them remain liable to all of its obligations. So did both parties to this contract, so long as they permitted it to remain in force, as it was when the collaterals were stolen. Under such circumstances, the liability of the appellant, to the full extent defined by the instructions of the court, seems clear. Erie Bank v. Smith, Randolph f Co. 3 Brewster, 9.
National banks are liable for the loss of property held by them, merely for the accommodation of their customers, without any consideration for the keeping of it, except the profit derived from their customers doing with them their banking business. But the conrt below did not consider it necessary to decide, and did not decide that point. It is not involved in this appeal. White v. Bank, 4 Brewster, 234; Pattison v. Syracuse Nat. Bank, 4 N. Y. S. Ct. Rep. 96; Skull v. Kensington Bank, Leg. Int. March 25, 1873; First Nat. Bank of Iowa v. The Ocean Bank, Court of Common Pleas of New York, 23d March, 1873; Smith v. First Nat. Bank in Westfield, 99 Mass. 605–11; Scott v. National Bank of Chester Valley, 72 Penn. 471.
The particular circumstances which the jury were told by the plaintiff's first prayer they might, not must, consider, were all proper for their consideration. That prayer is not liable to the objection that it gave to these circumstances undue prominence. Where a question of negligence or of care is one of mixed law and fact, there is no other way in which a jury
properly instructed on what their verdict ought to depend than by directing their
attention to the particular facts into which they should inquire. B. $ 0. R. R. Co. v. Schumacher, 29 Md. 168, 174–5; Maury g Osbourn v. "Coyle, 34 Ib. 237; Erie Bank v. Smith, Randolph f Co. 3 Brewster, 9; Story on Bailments, secs. 11, 12, 15, 17, 136, 332; B. g 0. R. R. Co. v. Worthington, 21 Md. 275, 282-4; Cumb. f Penn. R. R. Co. v. State, 37 Ib. 126 ; Cumb. v. Camden f Amboy R. Ř. Co. 2 Daly, 454; Ewalt | Myers v. Harding & Hopkins, 16 Md. 170.
The right of a party in any case to segregate facts, and to ask proper instructions in reference to them is well established. Williams v. Woods, Bridges f_Co. 16 Md. 220; Birney v. N. Y. f Wash. Telegraph Co. 13 Ib. 341; Parkhurst v. N. Central R. R. Co. 19 Md. 472. See also 17 Wall. 382, 383.
Even if the degree of care ought to have been defined in such legal language, the court did so define it, at the instance of the appellant, and did instruct the jury that the plaintiff was not entitled to recover if the defendant had used ordinary care.
The plaintiff's first prayer properly rested his right to recover “ on the failure on the part of the defendant to exercise such care and diligence in
THIRD NATIONAL BANK OF BALTIMORE v. BOYD.
the custody or keeping of them (the collaterals), as, at the time they were stolen, banks of common prudence, in like situation and business, usually bestow in the custody or keeping of similar property belonging to themselves;” and his seventh instructed the jury, that it was their province to determine, from all the facts and circumstances of the case, whether that amount of care had been used or not. B. $ 0. R. R. Co. v. Fitzpatrick, 35 Md. 22, 44.
It was no defence to the appellant that it had lost its own property, if it had not taken of it the necessary amount of care, and therefore the plaintiff's sixth prayer, in connection with the defendant's ninth prayer, was properly granted. Doorman v. Jenkins, 2 Ad. & El. 258 (29 E. C. L. 82); Tracy v. Wood, 3 Mason, 132; 2 Smith's Leading Cases, 340; Story on Bailments, secs. 64–7; Erie Bank v. Smith, Randolph f Co. 3 Brewster, 9.
In this case there are two counts in trover and two in case: one for violation of the duty imposed by law to deliver the bonds when demanded, if no indebtedness existed, for which they had been pledged; the other of the duty to keep them with such care that they should not be lost through the default of the defendant. The evidence was that the bonds had been stolen in the interval between Saturday afternoon, the 17th, and Monday morning, the 19th of August, 1872. The conversion, if the counts in trover were relied on, consisted not in the refusal to deliver them after they had been stolen, for then it was impossible — but in permitting them to be stolen.
If the counts in case were relied on, the obligation to keep the bonds so that they should not be lost by the fault of the defendant was broken by permitting them to be lost or stolen. The time of the loss of the bonds, under either count, was that at which the wrong to the plaintiff was done, and that at which the value of the property should be estimated. After the conversion was committed, or the liability in case had accrued, no demand to perfect the plaintiff's right was necessary, and his delay in making a demand which could not be complied with did not have the effect of postponing the period at which the value of the property should be taken as a standard of damages. Baltimore Marine Ins. Co. v. Dalrymple, 25 Md. 304-5; Williams v. Woods, Bridges & Co. 16 Ib. 220; Dietus v. Fuss, 8 Md. 157-160.
In actions on contracts, one is liable for the breach from the time he renders himself incapable of performing it, or refuses to perform it, or otherwise violates it. Sedgwick on Damages, 6th edit. page 419, note 2 ; Williams v. Woods, Bridges f Co. 16 Md. 220, 259; Dugan v. Anderson, 36 Ib. 581, &c.; 1 Robinson's Practice, 453.
Neither plaintiff nor defendant can claim, after either of these occurrences, that any locus penitentiæ remains which postpones the period at which the damages are to be estimated; nor can it be postponed by any subsequent demand for the performance of it made by the plaintiff, after the contract had been disaffirmed or violated by the defendant, or the performance of it had become impossible. Williams v. Woods, Bridges f Co. 16 Md. 220, 259; Baltimore Marine Ins. Co. v. Dalrymple, 25 Ib. 304-5.
THIRD NATIONAL BANK OF BALTIMORE v. Boyd.
BARTOL, C. J., delivered the opinion of the court.
This suit was brought by the appellee, to recover the value of certain coupon bonds and stocks, that passed like bank notes, by delivery; which had been deposited by the plaintiff with the defendant, and which had been stolen from the defendant, in consequence of its alleged failure to exercise ordinary care in the custody of them.
The case is one that, from its nature, depended at the trial below mainly on the questions of fact arising upon the evidence, with regard to the manner in which the bonds were lost, and the vigilance and care exercised by the bank in their custody. These were questions exclusively for the jury, whose province it was to decide whether there was any want, or omission of ordinary care and diligence on the part of the bank, from which the loss of the plaintiff's property resulted. These questions were submitted to the jury by the circuit court, were decided by them against the bank, and we have no authority or power to review their verdict.
All the prayers asked by the defendant, being either conceded by the plaintiff's counsel or granted by the circuit court except the tenth; the only matters presented for our consideration on this appeal arise upon the defendant's tenth prayer, which was refused ; and the first, fourth, fifth, sixth, and seventh prayers of the plaintiff, which were granted.
It appears by the evidence that the appellant was a bank organized under "the National Currency Act of 1864." The firm of William A. Boyd & Co., of which the appellee was senior member, was a large customer of the bank, through which all the banking business of the firm was transacted, and from which it received accommodations as needed. the 5th day of February, 1866, the firm was indebted to the bank about $5,000, when the appellee voluntarily proposed to the president of the bank, to deposit with the bank a large amount of bonds, about $37,000, as collateral security for his present and future indebtedness. The terms of the deposit, as agreed on between Mr. Boyd and the president, were dictated by the latter to the discount clerk — and were as follows:
" THIRD NATIONAL BANK,
February 5th, 1866. “ William A. Boyd has deposited with the Third National Bank of Baltimore $20,000 in United States 5-20 bonds, and $1,500 5–20, July, 1865 ; $5,000 Hudson County, New Jersey ; $5,000 Town of Saratoga, New York, 7 per cent. bonds ; $5,000 Stock of Third National Bank of Baltimore, as collateral security for the payment of all obligations of Wm. A. Boyd and Wm. A. Boyd & Co. to the Third National Bank of Baltimore, at present existing, or that may be incurred hereafter, with the understanding that the right to sell the above collaterals, in satisfaction of such obligations, is hereby vested in the officers of the Third National · Bank.
[Signed] A. H. BARNITZ, Discount Clerk." This paper was kept by the cashier of the bank in the same envelope with the bonds, – afterwards memoranda were inclosed therein, signed by the appellee's attorney and by the cashier, showing that certain of the bonds originally deposited had been withdrawn, and others deposited to replace them.
THIRD NATIONAL BANK OF BALTIMORE v. Boyd.
It appears from the evidence “ that while these collaterals remained in the bank, the firm kept a deposit account with the bank, having an average amount of about $4,000 on deposit, and from time to time as it needed, obtained discounts ranging from $2,000 to $15,000 on the security of the collaterals, but frequently, and for considerable times, as much as five months at a time, it sometimes owed the bank nothing, but left the bonds in its vault ; that at times when the firm wanted money for a very short time, it had obtained it from the bank, on the security of these collaterals on what were called call loans,' by checks such as the following:
“ Baltimore, July 13, 1871. “ Third National Bank of Baltimore pay to order of call loan on general collaterals, four thousand dollars. WILLIAM A. BOYD & Co.”
“ The firm was not indebted to the bank subsequent to July, 1872, when it paid its last indebtedness; the bonds were not withdrawn, but left with the defendant, under the original agreement." The bank was robbed and the bonds stolen in the manner described in the testimony, between Saturday evening, the 17th, and Monday morning, the 19th of August, 1872. It appears from the proof that the giving of the bonds as collateral security, was the voluntary act of the plaintiff, not done at the instance or request of the defendant; that the bank officers considered the account of the plaintiff's firm a very desirable one, and considered the arrangement, by which every liability of theirs was secured by the collaterals, very advantageous to the bank; " which was under no obligation to lend them anything; but the bonds and stocks were to be held as collateral security for all loans that might be made to them, and for their liability on any paper signed or indorsed by them, which might at any time be held by the bank.'
The defendant, by its tenth prayer, asked the court to instruct the jury, " That the defendant had no power, by the act of Congress under which it was incorporated, to assume and undertake the keeping of the plaintiff's bonds, while they were not held as collateral security for debts owing to it; and if the jury shall find that when the bonds were stolen .... there was not and had not been for nearly three weeks any indebtedness for which they were held as security, then the plaintiff cannot recover in this action.”
This prayer raises the question of the power of the bank to accept and retain the deposit of the plaintiff's bonds, in the manner and for the purpose disclosed in the evidence. Having been organized under the Act of Congress of 1864, ch. 106, the powers of the bank are limited and defined by the provisions of that act.
By section 8, it is authorized “to exercise all such incidental powers as shall be necessary to carry on the business of banking by discounting promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits ; by buying and selling exchange, coin, and bullion ; by loaning money on personal security, and by obtaining, issuing, and circulating notes according to the provisions of this act."
The construction of this section was considered by this court in Weckler v. First National Bank of Hagerstown, 42 Md. 581. The precise ques
THIRD NATIONAL BANK OF BALTIMORE v. Boyd.
tion, however, now presented did not arise in that case. There the attempt was made to hold the bank responsible for alleged fraudulent representations made by its teller in the sale of bonds of the Northern Pacific Railroad Company, which the narr. alleged the bank was engaged in selling on commission. It was decided, that “the business of selling bonds on commission was not within the scope of the powers of the corporation,” under the act of Congress to which we have referred. It was further held that the defence of ultra vires was open to the bank under the decision in “ The Steam Navigation Co. v. Dandridge, 8 G. & J. 318, 319; and consequently that the bank was not responsible for any false representations made by its teller to the plaintiff, whereby she was induced to purchase the bonds in question.” It is contended that the case now under consideration comes within that decision. In the argument of the cause, the counsel for the appellant has treated the transaction as a mere gratuitous deposit, simply for the convenience or accommodation of the appellee, and for the purpose of affording a place of safe keeping for his bonds, and has argued that the bank had no power to accept a hailment of that kind, or in other words to become a mere safe deposit company, and was not therefore responsible for the loss. There is very strong ground, both upon reason and authority, in support of the proposition that a national bank, deriving its existence and exercising its powers under the act of Congress referred to, is not authorized to enter into a contract as a mere gratuitous bailee, by receiving on special deposit for safe keeping merely, coin, jewelry, plate, bonds, or other valuables. Such a contract does not appear to be authorized by the terms of the 8th section, as a transaction * within the ordinary course and business of banking or incident to it;" and has been decided by the supreme court of Vermont to be unauthorized by the law, and beyond the scope of the corporate powers. Wiley v. First National Bank of Brattleboro', 47 Verm. 546. The very well considered opinion by Judge Wheeler in this case will be found in The American Law Register, N. S. vol. 14, p. 342, accompanied by an able note from the pen of Judge Redfield, in which the cases are collected and reviewed.
In the case of The First National Bank of Lyons v. The Ocean National Bank, 60 N. Y. 278, the court of appeals of New York have recently made a similar decision.
Assuming these decisions to be correct, and we are not disposed to question their soundness, it is clear that the contract entered into by the bank in this case, was not a mere gratuitous bailment. As shown by the
paper of February 5, 1866, the bonds were not received on special deposit, for safe keeping merely, but were received as collateral security for a debt then existing, and for all obligations that might thereafter be incurred by the depositor.
We entertain no doubt of the power of the bank to enter into a contract of that kind. To accept such collateral security for existing debts, and for future loans and discounts, is a transaction within the usual course of the business of banking, and incident thereto, and therefore within the terms of the act of Congress.
The power of national banks to receive such deposits was distinctly recognized by the supreme court of Vermont, and the court of appeals