San Joaquin Valley Bank v. Bours

Ross, J. The plaintiff is a banking corporation, and the defendant, from the 30th day of March, 1868, to March 17, 1877, was its cashier. By the by-laws of the bank the president and cashier were each empowered “to discount bills, notes, or other evidences of debt, to buy and sell bills of exchange, to make loans with or without security .... and generally to transact and carry on the business of the bank, subject to the direction of the board of trustees expressed through the by-laws or such express resolution as may, from time to time, be passed, and they shall each report to the board of trustees, when required, each and everything by them, or either of them, transacted.” [248]The evidence shows, and the findings of the court below are to the effect that the defendant was the active manager of the bank. Between the 1st day of Junuary, 1871, and the 1st day of October, 1874, he loaned, personally, and through the assistant cashier, to one De Blainville, divers sums of the plaintiff's money—in the aggregate $36,599, or thereabouts. Those loans were made without any security being taken therefor, and no entry or memorandum thereof was made in the books of the bank. ¡Nor was any note or memorandum of any kind whatever made or kept by defendant of the transactions with De Blainville, save and except memoranda upon slips of paper, called in the record, “tags,” and kept in the bank on a wire, which tags showed the amounts loaned to and paid by De Blainville and the balance due by him from time to time. On the 12th day of March, 1877, there remained, and ever since has remained unpaid, of the moneys so loaned to De Blainville by defendant, the sum of $9,247.49.

The by-laws required that the board of trustees should every month examine into the affairs of the bank, count its cash, and compare its assets and liabilities with the balances on the general ledger, for the purpose of ascertaining the condition of the bank, and -whether the books were correctly kept. The duty thus imposed upon the board seems, from the record, to have been grossly neglected; for prior to the month of March, 1877, the cash does not appear ever to have been counted by it, and none but the most superficial examination made into the affairs of the bank. The board, however, met monthly, and to it at each meeting the defendant presented as his report a book of general balances, which, among other things, purported to represent the amount of cash on hand. These representations—so far at least as the item of cash was concerned—were untrue; for the amount of cash represented by the book of general balances was more than the amount of cash in the vaults of the bank by the amount represented by the “tags” already alluded to. The defendant thus represented to the board of directors that certain money of the bank was in the vaults, whereas in truth he had loaned it to a man, not only without security and without taking from him the slightest evidence of indebtedness, but, so far as appears, without interest, and from whom he never made the