author: Agnew, C. J.

text:
    Scott & Brother versus The National Bank of Chester Valley.

    1. A mere depositary without special contract or reward, is liable for the loss of the deposit only in case of gross negligence, which is equivalent to fraud.
    2. The degree of care required of such depositary is that which he bestows on his own goods.
    3. A bank which was such depositary and exercising that degree of care is not liable for a larceny of the deposit, even by its own officers.
    4. From such special deposit with a bank of money in packages no consideration can be implied.
    5. A bank received bonds on special deposit for safety from one of its customers and at his risk, and placed them in a safe with similar deposits from others, and its own securities. The bonds were stolen by a teller. The theft by the teller was not connected with his employment and there was no liability on the bank unless they knew or had reason to suspect he was not trustworthy.
    6. The teller absconded and it was then discovered that his accounts were false and that he had robbed the bank during two years. Held, that the bank was not bound to examine the teller’s accounts for the benefit of a depositor who was a gratuitous bailee.
    7. Negligence as a ground of liability must be such as enters into the cause of loss.
    8. Purchase and sale of stocks by an officer of a bank is not ipso facto evidence of dishonesty, but if such officer be found engaged in stock-gambling or buying and selling beyond his means, he should not be continued in a place of trust.

      January 21st 1874.
    Before 'Agnew, C. J., Mercer and Gordon, JJ. Sharswood, J., at Nisi Prius.
    Error to the Court of Common Pleas of Chester county: Of January Term 1874, No. 193.
    This was an action on the case brought October 14th 1872, by John Scott, Jr., and Amos Scott, trading as Scott & Brother, against the National Bank of Chester Valley to recover the value of four government bonds, each of $1000, which had been placed by the plaintiffs with the bank for safe-keeping, and which had been stolen by John S. Martin, a clerk or teller of the bank.
    The bank was located in Coatesville ; the plaintiffs were storekeepers in the neighborhood and had kept an account with the bank from its organization, many years before. They were in the habit of depositing their government bonds and other securities with the bank for safe-keeping. Prior to October 1st 1872, they had deposited with the bank, bonds to the amount of $7000, which were contained in an envelope, and placed in a safe in the vault of the bank. On that day, or the day before, Martin absconded, being in default to the bank to the extent of about $26,000. On the 3d of October, one of the plaintiffs came to the bank and asked for their envelope, and upon examination it was discovered that four bonds of $1000 each were missing; it was afterwards ascertained that they had been stolen by Martin.
    Mr. Davis, the cashier of the bank, testified that when the bank had originally received for Safe-keeping the securities of persons desiring to deposit them in bank, each depositor placed his securities in his own box, and the boxes were placed in a large vault in the back part of the banking-room, behind the counter; that subsequently, the bank having been advised that unless they kept these securities as they did their own, they would be liable in case of loss, they procured a burglar safe, which they put inside of their vault. The boxes took too much space to be contained in the safe, and the bank proposed to these depositors, that if they were willing to put their securities into envelopes and have them thus placed in the safe, they might deposit them there.
    The depositors, amongst others the plaintiffs, acceded to this. The envelopes were numbered, and a check or card given by. the bank to the depositor. The check read: “Scott & Brother left with the bank a package containing valuable securities, said depositor assuming all risk from robbery or otherwise, said package to be delivered only to the depositor in person or on his written order, and surrender of this ticket.” The plaintiffs gave to the bank a written direction to have the coupons cut off the bonds as they became due, and credited to their account with the bank. It had been regularly so done ; the last coupons were cut off on the 1st of July 1872; the cashier had not seen the bonds after that day; nor had he known of their loss till the 3d of October, when the plaintiffs came for them after Martin had absconded; nor was his defalcation known or suspected till then.
    The securities of depositors were kept with the same care and in the same manner as the securities and bank-notes of the bank, and the individual securities of the president and cashier. The packages were delivered to the depositor by whatsoever officer of the bank was asked for them ; all the officers of the bank had access to the vault and the safe; the bank kept no record of the securities. All the other envelopes were examined and found correct.
    Martin entered the employ of the bank about April 1st 1867. Witness had known Martin from childhood ; he had a high reputation for integrity; never heard of anything wrong about him till he absconded; was the best officer the bank ever had. As afterwards discovered the first money Martin took from the bank was in July 1870.
    Mr. Gibbons, the president of the bank, testified much as the cashier: he also said that by opening a letter to Martin by mistake, witness and cashier ascertained early in 1871 that Martin had been dealing in stocks through Gilbough, Bond & Co., brokers in Philadelphia; Gilbough had formerly been a clerk in the bank; the witness went to Philadelphia to see Gilbough; they told witness that Martin had dealt to small amounts; they promised that if Martin again speculated they would advise witness; witness considered from that, that he had taken such measures as would secure the bank from any further speculations ; nothing was said to Martin on the subject. Witness saw Martin’s account three times a week, assisted him in counting up his cash, adding his figures, &c., looked over his books, &c. When witness learned that the bonds had been taken, he visited Gil-bough, Bond & Co., having been informed that they had received them and demanded the bonds from them ; they said they kept no numbers and were not liable for coupon bonds which passed by handing over. The bank had Martin pursued and arrested; he was convicted and sentenced for the larceny of these bonds.
    At the time Martin absconded, and for some time previously, his salary was $800; it had been lower when he first entered the bank, and had been gradually increased, tie was a young man, but was married; his mode of living did not appear to be beyond Ivs means; his habits inexpensive and nothing about them to excite suspicion. He had the confidence of the whole community, was treasurer of the Coatesville Gas Company, and of a church of which he was a member; and had been a receiver of the payments for the stock of a railroad company which had gone into operation not a great while before. In all these capacities he had been faithful.

      A number of witnesses, residents of the neighborhood, testified that Martin had always borne a good character.
    He had continued in his stock speculations, but Gilbough, Bond & Co. never informed the officers of the bank; nor did the officers make further inquiry about it.
    The accounts of Martin were examined slightly, his cash accounts always right according to the books; he had been acting-as receiving-teller at the time he absconded.
    Mr. Adams, the National Bank examiner, who had been called in to examine Martin’s accounts, testified:—
    “ Davis has as much as he can do to get through with; might have added up the columns every day; take two hours of every day; could only discover the false entries on note and discount book; the work would require considerable time; have to be watched all day long; take two or three hours daily; have to be done after the close of business; not usually done, unless grounds of suspicion; this bank conducted as well as any in Eastern Pennsylvania ; not customary to go over work in that way ; usual affairs settled in one-half hour; have to carry on his correspondence after bank hours; dividend six per cent., half-yearly; much of the defalcations were in false additions; the only cause of complaint was because he was allowed to keep his ledger, which was a check on his work; apart from that the bank is run- in tiptop style.”
    The plaintiffs’ points were:—
    1. If the jury find the defendant was a bailee for compensation, and that one of the officers of the bank stole and disposed of the property deposited, the plaintiff is entitled to recover.
    2. Even if the jury find the defendant was a bailee without compensation, and that one of the officers of the bank stole and disposed of the property, the plaintiff is entitled to recover.
    3. If the jury believe that there was want of ordinary care on the part of the defendant, or any of its officers, in keeping the bonds, or in retaining John L. Martin, the defaulter, in their employ after the fact that he was dealing in stocks was known, or in allowing him to keep the only book that was a check upon his operations, or in not sufficiently scrutinizing his accounts, the plaintiff is entitled to recover.
    The answers were:—
    “ 1. The law would be so if the defendant was a bailee for a consideration ; but in this case there is no proof of any consideration whatever.
    “ 2. This is not the law, provided the depositee (the bank) used ordinary care and prudence in the selection of their officers. Nothing but gross negligence on the part of the bank in making the selection will render it liable to the plaintiffs.
    “ 3. The default of the bank officers, in not looking over the accounts, cannot be taken advantage of by the plaintiffs. They were not defrauded by his account-books, but it is a case of direct larceny of their bonds.”
    The court (Pearson, P. J., of the 12th district), after giving a synopsis of the facts charged :—
    * * * “This is what we consider an outline of the facts; they are for the determination of the jury, who must pass on the evidence, and from that fill up the details. On this statement we must declare the law, which you must apply to the facts as you find them. [These bonds were delivered to the officers of the bank as mere depositees, without any benefit to the depositee, so far as has been proved, and for the convenience of the plaintiffs, and the bank was bound to no greater care of the deposit than a person of ordinary care and prudence generally takes of his own goods of equal value.]
    “ The depositee is responsible only for gross negligence; whether there was or was not gross negligence in this particular case is a question of fact for the jury.
    “ It is, perhaps, pretty clear that the defendants’ officers took the same care of the plaintiffs’ bonds that they did of the money of the bank, and of their own private bonds and property ; both were deposited in the same place, .and left under the control of the same clerks or agents.
    “ These bonds were not taken by outside force, but were abstracted by one of the bank clerks; carried off feloniously by him. Was he a man who, from his known character, would be intrusted in a bank by persons of ordinary prudence ?
    “ You have heard the statement of numerous witnesses as to the general character of this young man; all speak of him in the highest terms. He appears to have had the confidence of the entire community, as well as that of the bank officers; stood well in church and state; was made the treasurer of one of the churches, and of the Gas Company; nothing was known or said against him, so far as we can gather from the witnesses. Was it gross carelessness to trust him ?
    “ It is said, however, that more than a year before his delinquency became public, the cashier and president both knew that he had been dealing in stocks, and this, in itself, should have put those officers on their guard. You have heard the statement of both of those gentlemen, and, from that, it appears that when they accidentally discovered that he had so dealt on one occasion, they at once inquired of the broker in Philadelphia, with whom he dealt, and were informed that he had made one small purchase— had done well in it, and the broker, in whom the officers had confidence, promised that if he dealt further they should be informed.
    “ They never heard of any other dealing until the clerk had greatly defrauded the bank, committed the larceny of these bonds, and had absconded. Were the officers guilty of imprudence in retaining the clerk under the circumstances ?
    “ Is a single purchase and sale of stock such evidence of moral delinquency as would call for the immediate discharge of a valuable clerk of good general character ? It strikes us that it would be judging harshly of an act done daily in the cities, and business followed by men generally esteemed respectable. Had he been found at the gaming-table, or engaged in some fraudulent or dishonest practices, he should not be continued in a place of trust.
    “ These officers seemed to have acted with reasonable care and prudence in taking the steps they did to prevent a repetition of that kind of speculation.
    “ It is contended that the officers were careless in not examining more frequently Martin’s accounts, and had they looked into them with more vigilance and skill they would have detected his delinquencies and discovered his dishonesty. It is very clear, if you believe those officers, that they never did make any such discovery, had no suspicion that anything was wrong, and, therefore, continued to trust him with all of the property of the bank. [They were not bound to search into his accounts for the benefit of a gratuitous bailor, and his loss did not arise out of any account kept by the clerk, but from a transaction outside of his employment.]
    “ If a man should ask a merchant to keep a package of money over night, for the accommodation of the depositor, and the desk should be opendd and the money stolen by the merchant’s clerk, could it be successfully urged that it might have been discovered that the clerk was dishonest, and had stolen his master’s goods, if the merchant had watched with sufficient vigilance ? It would certainly be a good answer for the merchant to say, I never did discover the clerk’s dishonesty, I trusted him with my own money, and was not bound to seek out his delinquencies for the sake of a gratuitous bailor.
    “ [It is assumed, that if the bonds were stolen by defendant’s clerk, it is liable whether his propensity to steal was known or not, and without regard to his general character. We instruct you that there is no such legal principle as applied to the loss of goods bailed without hire for the accommodation of the bailor.] This subject underwent careful examination in the case of Foster v. The Essex Bank, 17 Mass. 479, and the doctrine there enunciated has been adhered to ever since, if we may judge from what is laid down in Parsons on Contracts, title ‘ Bailment.’
    “It has been likened to the case of servants in a tavern, to which it has no similitude. Guests in an inn are a profit to the keeper, and therefore are in the light of bailors for hire paid. Besides, innkeepers are held to strict account as a matter of public policy, but a guest at a private house would be placed on a different footing. He could scarcely urge a claim successfully against his host for the loss of his goods through the dishonesty of servants, unless he would show that the man he was visiting, knew of their propensity.
    “ It was ruled by Lord Coke in Southcote’s Case, that unless goods were specially received, they must be safely kept at the peril of the bailee. But the soundness of that case was questioned soon after, and was expressly overruled in Coggs v. Bernard, and has never since been considered sound. It is questionable whether the defendant would be held liable even under that case, as the ticket given to plaintiffs shows that the package was to be left at the risk of the depositors, either from robbery or otherwise. The question as to gross carelessness on the part of the bank in keeping these bonds, or the selection of their clerk, is one of fact to be decided by the jury. If it did not exist, your verdict will be in favor of the defendants. If it did, you will find for the plaintiffs the full value of the bonds at the time they were abstracted or stolen.” >
    The verdict was for the defendants.
    The plaintiffs removed the record to the Supreme Court and assigned for error the answers to the points and the parts of the charge in brackets.

      W. B. Waddell and W. Darlington (with whom was B. T. Cornwell), for plaintiffs in error,
    cited Story on Agency, sect. 452; Bank of Kentucky v. Schuylkill Bank, 1 Parsons 215, 216.

      J. S. Futhey and P. Frazer Smith (with whom was €r. F. Smith), for defendants in error,
    cited Coggs v. Bernard, 2 L’d Raym. 909; Mytton v. Cock, 2 Strange 1099; Finucane v. Small, 1 Espinasse 315; Shiells v. Blackburne, 1 H. Blackstone 158; Foster v. The Essex Bank, 17 Mass. 479 ; Tompkins v. Saltmarsh, 14 S. & R. 275; Doorman v. Jenkins, 2 Adolph. & Ellis 256; Lancaster County Bank v. Smith, 12 P. F. Smith 47.
    February 16th 1874,

       This case being thought of peculiar interest, it is inserted in anticipation of its chronological order.

   The opinion of the court was delivered, by

Agnew, C. J.

— As early as the case of Tompkins v. Saltmarsh, 14 S. & R. 275, it was decided that a delivery of a package of money to a gratuitous bailee, to be carried to a distant place, and delivered to another for the benefit of the bailor, imposes no'liability upon the bailee for its safe-keeping, except for gross negligence. In that case, the package was stolen from the valise of the bailee, at an inn, in the course of his journey, after it had been carried to his room, in the usual custom of inns in that day (1822). The same rule is laid down by Justice Coulter, arguendo in Lloyd v. West Branch Bank. He says, a mere depositary, without any special undertaking, and without reward, is accountable for the loss of the goods, only in case of gross negligence, which in its effects on contracts is equivalent to fraud. He further remarks, that the accommodation here was to the bailor, and to him alone, and he ought to be the loser, unless he in whom he confided, the bank or cashier, had been guilty of bad faith in exposing the goods to hazards to which they would not expose their own. These rules he derived from Coggs v. Bernard, 2 Lord Raymond 909, and Foster v. Essex Bank, 17 Mass. 501. In the latter case, the law of bailment was exhaustively discussed by Parker, C. J., and the conclusions were as above stated. It was further held, that the degree of care which is necessary to avoid the imputation of bad faith, is measured by the carefulness which the bailee uses towards his own property of a similar kind. When such care is exercised, the bailee is not answerable for a larceny of the goods, by the theft even of an officer of the bank. It is further said that from such special bailments even of money, in packages for safekeeping, no consideration can be implied. The bank cannot use the deposit in its business, and no such profit or credit from the holding of the money can arise as will convert the bank into a bailee for hire or reward of any kind. The bailment in such case is purely gratuitous and for the benefit of the bailor, and no loss can be cast upon the bank for a larceny, unless there has been gross negligence in taking care of the deposit. These appear to be just conclusions, drawn from the nature of the bailment. The rule in this state is restated by Thompson, C. J., in Lancaster Bank v. Smith, 12 P. F. Smith 54. He says, The case on hand was a voluntary bailment, or more accurately sp'eaking, a bailment without compensation, in which the rule of liability for loss is usually stated to arise on proof of gross negligence.” That case went to the jury on the question of ordinary care, and hence the observation of the Chief Justice that the same idea was sufficiently expressed by the judge below, in using the words “ want of ordinary care.” It may be proper, however, to say, that want of ordinary care is applicable to bailees with reward, when the loss arises from causes not within the duty imposed by the contract of safe-keeping, as from fire, theft, &c., and hence is not the measure in such a case as that before us, which we have seen is gross negligence. That case was one where the teller of the bank delivered the deposited bonds to a stranger calling himself' by the name of the bailor, without taking sufficient care to be certain that he was delivering the package to the right person, and the bank was held responsible for his negligence. Then the teller in giving out the deposit, was acting in his official capacity, and hence the liability of the hank. The case before us now is different, the bonds being stolen by the teller, who absconded. This teller was both clerk and teller, but the taking of the bonds was not an act pertaining to his business as either clerk or teller. The bonds were left at the risk of the plaintiffs, and never entered into the business of the bank. Being a bailment merely for safe-keeping for the benefit of the bailor, and without compensation, it is evident the dishonest act of the teller was in no way connected with his employment. Under these circumstances, the only ground of liability must arise in a knowledge of the bank, that the teller was an unfit person to be appointed or to be retained in its employment. So long as the bank was ignorant of the dishonesty of the teller, and trusted him with its own funds, confiding in his character for integrity, it would be a harsh rule that would hold it liable for an act not in the course of the business of the bank, or of the employment of the officer. There was no undertaking to the bailor that the officers should not steal. Of course there was a confidence that they would not, but not a promise that they should not. The case does not rest on a warranty or undertaking, but on gross negligence in care-taking. Nothing short of a knowledge of the true character of the teller, or of reasonable grounds to suspect his integrity, followed by a neglect to remove him, can be said to be gross negligence, without raising a contract for care, higher than a gratuitous bailment can create. The question of the bank’s knowledge of the character of the teller was fairly submitted to the jury.

But it turned out that after the teller absconded, his accounts were found to be false, and that he had been abstracting the funds of the bank for about two years, to an amount of about $26,000. It was contended that the want of discovery of the state of his accounts for such a length of time, especially as he had charge of the individual ledger, -was such evidence of negligence as made the bank liable. The court negatived this position, and held that the bank was not bound to search his accounts for the benefit of a gratuitous bailor, whose loss arose not from the accounts as kept by him, but from a larceny, a transaction outside of his employment. We perceive no error in this. The negligence constituting the ground of liability, must be such as enters into the cause of loss. But the false entries in the books, and the want of their discovery, was not the cause of the bailor’s loss, and not connected with it. True, the same person was guilty of both offences, but the acts were unconnected and independent. True, the bank did not discover in time the injury he did to it, but the very fact that it did not discover his false entries and his peculations, repels the knowledge of his dishonesty. The neglect was culpable, and might have led to responsibility to those with whom they had dealings, if they suffered from that neglect. But this neglect to examine into his accounts, was not the cause of the bailor’s loss. His loss was owing to the immediate act of dishonesty of the teller, and not to his purloining the funds, or falsifying the accounts of the bank. The argument of the plaintiff results simply in this: that mistaken confidence is a ground of liability. But if this were the rule, business would stand still; for without a common degree of confidence in agents and officers, much of the business of the world must cease. The facts were fairly left to the jury, with the proper instruction.

Another complaint is, that the teller was suffered to remain in employment after it was known that he had dealt once or twice in stocks. Undoubtedly the purchase or sale of stocks is not ipso facto the evidence of dishonesty, but as the judge well said, had he been found at the gaming-table, or engaged in some fraudulent or dishonest practices, he should not be continued in a place of trust. So if the president of the bank, when he called on the brokers who acted for the teller in the purchase of the stock, had discovered that he was engaged in stock-gambling, or in buying and selling beyond his evident means, a different course would have been called for. No officer in a bank, engaged in stock-gambling, can be safely trusted, and the evidence of this is found in the numerous defaulters, whose peculations have been discovered to be directly traceable to this species of gambling. A cashier, treasurer, or other officer having the custody of funds, thinks he sees a desirable speculation, and takes the funds of his institution, hoping to return them instantly, but he fails in his venture, or success tempts him on; and he ventures again to retrieve his loss, or increase his' gain, and again and again he ventures. Thus the first step, often taken without a criminal intent, is the fatal step, which ends in ruin to himself and to those whose confidence he has betrayed. Hence any evidence of stock-gambling, or dangerous outside operations, should be visited with immediate dismissal. In this case, the operations of the .teller in stocks as a gambler in them, were unknown to the officers of the bank until after he had absconded. Upon the whole, the case appears to have been properly tried, and finding no error in the record, the judgment is affirmed.


source: Caselaw Access Project

author: Williams, J.

license: Public Domain

text:
    McBride’s Appeal.
    1. In distributing the estate of a deceased wife, the husband is not a competent witness before the auditor in support of a claim as creditor against her estate.
    2. “ Actions,” in the Act of April 15th 1809 (Witnesses), includes all civil
    3. The purpose of th-e supplement of April 9th 1870, was to permit persons excluded by the proviso in the Act of 1809 to testify in matters occurring since a decedent’s death.
    4. An action is a legal demand of one’s rights in a court of justice.
    5. The husband, having elected to take against his wife’s will, claimed rents included in her executors’ account. By the confirmation of the account the rents were part of decedent’s estate, to be distributed as such. The husband could not raise the question of his ownership in a proceeding for distribution.

      6. In a proceeding for distribution no one can claim but through the decedent, as creditor, legatee or next of kin.
    February 17th 1871.
    Before Thompson, C. J., Agnew, Sharswood and Williams, JJ. Read, J., at Nisi Prius.
    Appeal from the Orphans’ Court of Philadelphia: No. 275, to January Term 1871. In the estate of Martha McBride, deceased.
    The decedent, then a resident of Minnesota, on the 7th of June 1867, made her will which was signed by herself and her husband John McBride, “who hereby consents to and approves of the foregoing will.”
    She gave real estate which ■ she owned in Philadelphia to her children, Samuel McCanless and others whom she named, “ to be equally divided between them, share and share alike.” She authorized her executors to rent her real estate, and put the proceeds to interest, and if they should think it “to the best advantage,” to sell the real estate, and invest the proceeds: the whole to be divided when her youngest daughter arrived at age. She gave to her son Samuel T. McCanless, what should be coming to her out of her first husband’s estate, and at his death to go to his children. She gave to her three youngest children, children of her first husband, all her personal property. She appointed Thomas It. Patton and William Blakely, Jr., her executors to - settle her estate in Pennsylvania, and other executors in Minnesota to settle her “ affairs and dispose of my personal property in the state of Minnesota.” She made no provision in this will for her husband John McBride.
    The executors in Pennsylvania filed their account December 30th 1869, charging themselves with $3453.37, a very large proportion of which was rents received from the real estate of the testatrix in Pennsylvania. The balance in the hands of the executors was $2583.32. This was referred to John B. Collahan, Esq., to report distribution.
    Before the auditor, John McBride, the surviving husband of the testatrix, claimed as a creditor. His claim being resisted by the devisees, he was offered as a witness to establish it. He was rejected by the auditor as incompetent. The auditor allowed the claims of a number of the creditors of Mrs. McBride, which reduced the balance in the hands of the executors to $1884.13. This sum he divided amongst the children of Mrs. McBride in accordance with her will: and so reported.
    McBride filed exceptions to the report, one of which was, that the auditor would not permit him to testify in support of his claim.
    The Orphans’ Court (Allison, P. J.) dismissed his exceptions, and confirmed the auditor’s report. McBride made no claim before the auditor or the Orphans’ Court as surviving husband.
    McBride appealed to the Supreme Court, and assigned the following errors:—

      1. Dismissing the first exception of John McBride, viz.: “Because the auditor refused to permit the said claimant John McBride to testify in support of his own claim.”
    2. Because it appears from the record that the balance for distribution among the legatees as reported by the auditor and allowed by the Orphans’ Court consisted of rents derived from real estate of the testatrix, Martha R. McBride, and that the same belonged and ought to have been awarded to the appellant, who, as appears from the record, was the husband of the testatrix, and tenant by the curtesy of said real estate.

      S. Hood, for appellant.
    6r. Junkin, for appellees.
    January 9th 1872,
   The opinion of the court was delivered, by

Williams, J.

— It is clear that the appellant was not admissible as a witness in support of his own claim as a creditor of the estate of his deceased wife, unless he was rendered competent by the Act of 15th April 1869. That act declares that “ no interest nor policy of law shall exclude a party or person from being witness in. any civil proceeding: Provided, this act shall not alter the law as now declared and practised in the courts of this Commonwealth, so as to allow husband and wife to testify against each other, nor counsel to testify to the confidential communication of his client; and this act shall not apply to actions by or against executors, administrators or guardians, nor where the assignor of the thing or contract in action may be dead, excepting in issues and inquiries devisavit vel non and others, respecting the right of such deceased owner, between parties claiming such right by devolution on the death of such owner.” If, under the first clause of the proviso, the husband would not be a competent witness in support of his claim against the wife if she were living, why should he be a competent witness in support of his claim against her estate, now that she is dead ? There would seem to be a greater reason for his exclusion in the latter than in the former case. As the law was “ declared and practised in the courts of this Commonwealth” at the date of the passage of the act, the husband could not have been examined as a witness in support of his claim against his wife, whether she were living or dead. Manifestly it was not the purpose of the act to open the lips of one party while those of the other were closed. This is abundantly evident from the provision that “ this act shall not apply to actions by or against executors, administrators or guardians.” But it is said that this proceeding, for the distribution of the deceased wife’s estate, is not an action, and is, therefore, excluded from the operation of the proviso and embraced within the enacting provisions of the statute, which declare that “ no interest nor policy of law shall exclude a party or person from being a witness in any civil proceeding.” But to give such a construction to this clause of the proviso would he adhering to the letter and rejecting the spirit and reason of the provision — Qui hceret in litera hceret in cortice. He who considers merely the letter of the enactment goes but skin-deep into its meaning. That the term “ actions,” as used in the proviso, was intended to embrace all civil proceedings, of whatever kind, is evident from the supplement of the 9th of April 1870, which declares that in all actions or civil proceedings in any of the courts of this Commonwealth, brought by or against executors, administrators or guardians, or in actions where the assignor of the thing, or contract in action, may be dead, no interest or policy of law shall exclude any party to the record from testifying to matters occurring since the death of the person whose estate, through a legal representative, is a party to the record.” The purpose of the supplement is obvious : It was intended to permit a party, who would otherwise have been excluded by the proviso in the original act, to testify to matters occurring since the death of the person whose estate, through a legal representative, is a party to the record. And it shows that, in the legislative understanding, the word “ actions,” as used in the proviso, was intended to embrace civil proceedings, whatever their form, as well as actions technically so called. If this was not the intention and ■ understanding of the law-making power, why were “ issues and inquiries devisavit vel non, &c.,” excepted from the “actions” to which it was declared that the act should not apply ? Besides, \ a suit or action, according to its legal definition, is the lawful f demand of one’s right in a court of justice: jus prosequendi in judieio quod alicui debitur: 3 Black. Com. 116. This definition is broad-enough to include the proceeding in this case. The Orphans’ Court was, therefore, clearly right in. dismissing the exception to the auditor’s report because of his refusal to permit the appellant to testify in support of his own claim.

But the appellant further contends, that the fund for distribution in the hands of the executors, consisting of the rents derived from the real estate of the testatrix, belonged, and ought to have been awarded, to him as tenant by the curtesy of the said real estate. It is admitted that this claim was not made before the auditor or in the court below, and that it is now made here for the first time. This might, perhaps, be a sufficient reason for disregarding it. But the appellant insists that not having made his election to take his wife’s real estate as tenant by the curtesy until after the confirmation of the auditor’s report, he is entitled to claim the fund in this appeal, as tenant by the curtesy, under the provisions of the 4th section of the Act of 14th April 1835, and the 2d section of the Act of 16th June 1836, which require the Supreme Court, in all cases of appeal from the Orphans’ Court, to hear, try and determine the same, and the merits thereof, as to right and justice may belong, and decree according to the justice and equity thereof. Conceding the appellant’s right to raise the question in this appeal, let us see whether he has any such title to the fund as tenant by the curtesy as will avail him here. This is a proceeding for the distribution of the personal estate of the testatrix in the hands of her executors. The fund for distribution, from whatever source derived, constitutes part of the decedent’s estate; and no one is entitled to claim any portion thereof in this proceeding for its distribution who does not claim i.t through the decedent and as a part of her estate, either as creditor, legatee or next of kin. But the appellant does not claim it either as the decedent’s creditor’, legatee or next of kin, nor does he claim it as a part of her estate; but he claims it in his own right as tenant by the curtesy, and as a part of his own estate. He can maintain his claim only by denying that the fund is any part of the estate of his deceased wife. Now it is clear that he cannot raise any such issue in this proceeding for distribution. He must claim the fund through the decedent, and as a part of her estate, or not at all. If he denies that the money belongs to the estate of his wife, and claims it as his own, in virtue of his tenancy by the curtesy, he must resort to some other forum and to some other form of proceeding for his remedy. He has no standing to raise any such issue in this proceeding, no more than any stranger who should claim the fund by a title adverse to that of the decedent. Whether the appellant is or is not entitled to the real estate of his wife, as tenant by the curtesy, is a question which does not arise here, and, therefore, we are not called upon to express any opinion in regard to it, though it was the main question discussed on the argument.

Decree affirmed at the cost of the appellants.


author: Shakswood, J.

text:
    Mulliken versus Graham.
    1. In ejectment by Graham on an equitable title against Mulliken, who claimed under conveyance from Graham’s vendor; a memorandum of a sale to Graham was admissible as evidence of his title without proof of notice of it to Mulliken.
    2. It was not necessary that Mulliken should have notice of the identical paper to make it evidence; it was part of Graham’s evidence of his equitable title.
    3. Vague reports of strangers or information by one not interested will not affect a purchaser with notice.
    4. A purchaser will be affected by information derived from a person interested and from a source likely to gain credit, although not the party or his agent.
    6. Evidence in this case to affect a purchaser with notice of an equitable title.

      February 28th 1871.
    Before Thompson, C. J., Agnew, Sharswood and Williams, JJ. Read, J., at Nisi Prius.
    Error to the District Court of Philadelphia: No. 258, to January Term 1870.
    This was an action of ejectment, brought February 19th 1868, by Charles H. Graham against Charles Mulliken, to recover possession of a house in Mount Vernon street, Philadelphia, with notice of claim for mesne profits.
    The parties both claimed under Upton S. Newcomer.
    On the 1st of July 1862, The Franklin Fire Insurance Company conveyed the Ephrata Springs to Newcomer, Graham alleged that subsequently by arrangement with Newcomer he became the owner of one-half the Springs; that afterwards he sold his interest in that property to Captain John Fredericks and received in part payment the premises in dispute. He entered into possession of the Mount Vernon street house by a tenant, but had received no deed for either that or the Springs property.
    The Mount Vernon street property, instead of being conveyed to Graham, was conveyed to Newcomer, and afterwards by him to Mulliken, the defendant. Graham’s tenant having left the property and it being unoccupied, Mulliken broke and entered into it. This suit was brought to recover the possession.
    The questions in the case were — whether Graham had an equitable title to the Mount Vernon street house, and whether Mulliken was a boná fide purchaser without notice of Graham’s title.
    The cause was tried May 14th 1869, before Thayer, J.
    Graham testified that the Springs property being for sale for $15,000, Newcomer, in June 1862, asked him to raise $3000 for the cash payment. He did so, and paid it to the Franklin Fire Insurance Company, the owners. He afterwards, at Newcomer’s request, bought the furniture for about $7000, from the executors of Konigmacher, who had occupied the property, Graham in consideration to have a half interest in the property. He gave the notes of Weaver & Graham for the money, and paid them when due. Newcomer opened the house at the Springs in 1862, and paid Graham $1000 as profits of that year. The business not being so good the next year, he proposed to sell his interest to Newcomer for $13,000. To this Newcomer assented, but could not raise the first payment. A negotiation was afterwards entered into with Captain Fredericks for the interest of both Graham and Newcomer, and Fredericks agreed to give $30,000 if Graham would take in payment for his interest the property in dispute at $5500, other property at $2000, and $7500. cash. To this Graham assented, and a memorandum of the contract was drawn up by Graham’s book-keeper. He directed Mr. Fitler, a conveyancer, to draw the deeds. Fredericks sent the key of the property in dispute to Graham, who took possession June 21st 1864. He lost possession by Mulliken breaking into the house.

      He testified further that the transaction between them not being concluded on July 1st 1864, the time appointed, he authorized Newcomer to settle with Fredericks. Newcomer afterwards informed him that he had settled with Fredericks and had spent all Graham’s money. Graham caused Newcomer to be indicted, and at his trial in the Quarter Sessions, Mulliken was present under subpoena by the prosecution. The memorandum of the agreement with Fredericks was read at that trial.
    On cross-examination he said that he did not refuse to ratify the agreement after he got possession; never refused to take the other property he had agreed to take. Mr. Fitler said he was to deliver the deed upon Graham surrendering all the papers. Graham had made no arrangement to surrender the papers. When he advanced the money for the Springs property and furniture he took a judgment-bond to the firm of Weaver & Graham, of which he was a member, to secure himself.
    Williams, the book-keeper of Graham, testified that he made the memorandum of the sale to Fredericks in presence of Fredericks, Newcomer and Graham. He read it; all heard it and looked at it.
    Plaintiff gave other evidence, that the memorandum of sale to Fredericks was read at the criminal trial and that Mulliken was present during the whole trial.
    Newcomer testified that Fredericks, who was the father-in-law of Mulliken, negotiated the transfer of the property to him from witness; Fredericks knew all; he acted as Mulliken’sagent; Fitler was witness’s conveyancer; Mulliken was aware of the trouble about this property.
    Plaintiff gave in evidence: — deed Newcomer to J. W. Fredericks (a son of Captain Fredericks) for the Ephrata property, dated July 1st 1864. Deed W. H. Wilson (a son-in-law of Captain Fredericks) to Newcomer for the Mount Vernon street property, dated July 1st 1864.
    Also under objection and exception, the memorandum of the sale by Graham to Fredericks, viz.:
    “ June 7th 1864.
    C. H. Graham’s interest, in Ephrata sold to Capt. Fredericks for son for $15,000.
    Payable:
    Mt. Vernon street house . . . $8,500
    (Mortgage $8000) . ... 3,000
    ¡>5,500
    House and lot in New Phila., Ohio 1.500
    Bond Penna. Iron Co., Danville, Pa. 500
    Cash ..... 7.500
    $15,000”

      The plaintiff gave other evidence in corroboration of his testitimpny and generally in support of his case.
    The defendant gave in evidence deed dated November 29th 1866, to himself from Newcomer for the Mount Yernon street house.
    Captain Frederick testified, that the sale of Ephrata property was from Newcomer alone, who agreed to take the property mentioned by Graham, if Graham would take from him the Mount Yernon street house and the New Philadelphia property towards payment of what Newcomer owed him: Graham “backed out.” Newcomer afterwards told witness to make the deed to him and he would arrange with Graham. Witness denied that the memorandum had been read to him. He negotiated with Newcomer for the sale of the Mount Yernon street house for Mulliken.
    Newcomer testified that Graham was to give up all his notes upon receiving the deed for the Mount Yernon street property.
    Fitler testified, that he had been instructed to draw the deed to Graham, and Graham afterwards said he had ascertained that the New Philadelphia property was not worth what it had been represented, and he would not take it as agreed, and he was then directed to make the deed to Newcomer. The deed had been prepared for Graham and executed; upon his refusing to surrender the notes it was cancelled.
    Mulliken testified, that he never knew that Graham had any interest in the property till he heard it at Fitler’s office ; “That was, that he had agreed to take it and afterwards refused, and Newcomer told me that was broken off;” witness bought after the trial of Newcomer; he (witness) had not paid anything for the house, nor interest on a judgment that was against it. He did not tell Graham’s tenant that he had bought the house: he passed the house and found it empty, and with the services of a locksmith took possession of it.
    There was other evidence on both sides.
    The following are points of the defendant with their answers:—
    1. If Graham got the possession of the property in June 1864, under an agreement to receive it and' the New Philadelphia lots on account of the payment of the notes he held against Newcomer, and afterwards refused to receive the New Philadelphia lots, he was bound to restore the Mount Yernon street property (Newcomer’s), and cannot avail himself of the possession obtained under such circumstances.
    Answer: “ If it was part of the agreement that Graham should surrender Newcomer’s notes after his getting the Mount Yernon street house, and refused to surrender them, but held on to them, then he could not avail himself of a possession obtained in pursuance of a contract which he refused to perform.”
    4. In any event, unless the jury believe from the evidence, that notice was given by Graham to Mulliken or some one acting for him during the time he, Mulliken, was negotiating for the purchase of the Mount Vernon street property, that Graham claimed to be owner of it, the verdict must be for the defendant.
    Answer: “If Mulliken was a bond; fide purchaser without notice of Graham’s alleged title, then he is not affected by • Graham’s title, and is entitled to a verdict.”
    I 5. If Mulliken purchased the property of Newcomer pursuant to an agreement made to take it, subject to the mortgage, and pay Watson’s judgment, and paid $270 in cash, and gave his obligation for the balance when he got possession, he is a bond; fide purchaser, and entitled to as much protection as if he had paid the cash at the time he received the deed.
    Answer: “Yes, if he had not actual notice of Graham’s title.”
    6. Unless Mulliken had, before he received the deed and paid the money, and gave his obligation to Newcomer, direct, express and positive notice that Graham claimed to be the owner of the Mount Vernon street house, the verdict must be for the defendant.
    Answer: “ I affirm this, but add, it is not necessary that he should have had formal notice from Graham, or anybody else, that he was the owner. It is sufficient if he knew of Graham’s title. Knowledge is all that is necessary.”
    9. The mere reading of the memorandum, dated June 7th 1864, in the trial at the Criminal Court, in which Mulliken was not a party and had no interest, and as to which there is no direct, express or positive evidence that he heard it read, is not such evidence as will warrant the jury in finding that Mulliken had notice that Graham claimed title to the property.
    Answer: “ The reading of the memorandum in the presence of Mulliken, if it was so read in the court-room, may be considered by the jury with the other evidence. It does not appear to me that it ought to be of any great weight alone, but its weight is for the jury.”
    . 10.' Notice, to affect Mulliken, should have been in the transaction resulting in the purchase by Mulliken.
    Answer: “Refused.”
    11. There is no evidence of notice by Graham to Mulliken in the transaction resulting in the - purchase of the property by Mulliken, that Graham owned or claimed to own the property.
    Answer: “There is no evidence of express notice given by Graham to Mulliken in the transaction, for it does not appear they had any negotiation upon the subject; ,but if Mulliken had at the time any actual notice from other sources, he is affected by the equity existing between Graham and Newcomer.”
    The verdict was for the plaintiff with $1000 mesne profits.
    The defendant took a writ of error and assigned for error: the admission of the evidence objected to and the answers to defendant’s points.

      A. Briggs, for plaintiff in error.
    — There was no express notice to Mulliken, and mere rumor is not sufficient: Jaques v. Weeks, 7 Watts 261; Kerns v. Swope, 2 Id. 75; Churcher v. Guernsey, 3 Wright 84. Notice to an agent in one transaction, is not notice to his principal in an independent transaction — and á fortiori to another party who employs the same agent upon another occasion: Bracken v. Miller, 4 W. & S. 102; Boggs v. Varner, 6 Id. 469; Hood v. Fahnestock, 1 Barr 470; Warrwick v. Warrwick, 3 Atk. 290-4; Hilliard on Vendors 414, section 12; 2 Sugden on Vendors 537-8. The possession by the tenant was notice only of the interest of the tenant: Souder v. Morrow, 3 Phila. R. 112; s. c. 9 Casey 84.

      P. Archer and W. J. Budd (with whom was John P. O'Neill), for defendant in error.
    — Notice of an equitable interest need not come from the party or his agent, it is sufficient if it be derived aliunde: 2 American Notes to Wliite & Tudor’s Leading Cases in Equity 158; 1 Story’s Eq. Jur., sec. 400 et seq.; Ripple v. Ripple, 1 Rawle 386; Butcher v. Stapely, 1 Vern. 364; Woods v. Farmere, 7 Watts 382; Daniels v. Davison, 16 Ves. 249; Simon v. Gibson, 1 Yeates 291. One about buying land is bound by information given him by agent of the vendor; Lewis v. Bradford, 10 Watts 67; Sergeant v. Ingersoll, 7 Barr 340. Possession is notice: Billington v. Welsh, 5 Binney 132; Cresson v. Miller, 2 Watts 275; Sailor v. Hertzog, 4 Wharton 259 ; Krider v. Lafferty, 1 Id. 303; McCulloch v. Cowher, 5 W. & S. 427; Green v. Drinker, 7 Id. 440. Whatever puts a party on inquiry, amounts to notice: Knouff v. Thompson, 4 Harris 357; Jaques v. Weeks, 7 Watts 267; Epley v. Witherow, Id. 163; Churcher v. Guernsey, 8 Wright 84; Hill v. Epley, 7 Casey 331; Lloyd v. Lynch, 4 Id. 419; Meehan v. Williams, 12 Wright 238; Patton v. Borough of Hollidaysburg, 4 Id. 206; Maule v. Rider, 9 P. F. Smith 167; Butcher v. Yocum, 11 Id. 168.
    March 6th 1871,
   The opinion of the court was delivered, by

Shakswood, J.

— The learned judge below committed no error in admitting in evidence the memorandum of June 7th 1864, which forms the subject of the first assignment of error. When the plaintiff offered it, he was not called on to state the purpose for which it was introduced. If it was evidence for any purpose it was admissible. It clearly tended to prove the equitable title upon which the plaintiff claimed to recover. It was on its face an account of the sale of his interest in Ephrata to John W. Fredericks, and from it would be gathered that the premises in controversy— the Mount Vernon street house — was received as part of the consideration of that sale. Graham testified that it was drawn up by Williams, his book-keeper, as a memorandum of the contract between Fredericks and himself, and after it was written it was read to Newcomer, Fredericks, his brother and himself. Williams, by his testimony, confirmed this statement. It is clear, then, that as independent evidence of the contract, as well as in corroboration of Graham’s testimony, the memorandum was admissible without regard to the question whether Mulliken had notice of it. It was not necessary that he should have notice or knowledge of that identical paper to make it evidence. Whether he was a bond, fide purchaser without notice of Graham’s equity was another and distinct question in the cause. The plaintiff had first to establish his equitable title, and then if Mulliken succeeded in showing himself to be a purchaser of the legal title for a valuable consideration paid, it would devolve upon him to give evidence of notice to Mulliken of his equity before he made the purchase or parted with his money or other valuable consideration.

The second assignment of error is to the answer of the learned judge to the first point of the defendant below. Substantially the principle of the point submitted was affirmed, but more accurately in its application to the facts. There was no distinct evidence of an offer and refusal of the New Philadelphia lot. The plaintiff objected on that score, but what he did refuse as to his part of the contract was to surrender Newcomer’s notes, and the judge charged upon the point submitted with the correction in the application of the principle to the case in accordance with the point.

The other assignments of error depend upon the solution of a single question, and it is frankly conceded that if there was any evidence in the cause to affect Mulliken with notice, actual or constructive, of Graham’s equity, there was no error in the answers or charge of which the plaintiff in error has any right to complain. This question is made to hinge mainly upon another, w'hether to affect the purchaser there must be actual notice by the holder of the equity, or some one for him, in the transaction which resulted in the purchase, or whether knowledge by the purchaser derived from any reliable source is sufficient. Certainly the vague reports of strangers, or information given by a person not interested, will not have the effect of notice to the purchaser; Kerns v. Swope, 2 Watts 75; Jaques v. Weeks, 7 Id. 261; Churcher v. Guernsey, 3 Wright 86 ; but information derived through parties interested and from a reliable source is different. Although a purchaser may disregard rumors set afloat by those who have no right to intermeddle, he is bound to attend to the admonitions of a party in interest: Ripple v. Ripple, 1 Rawle 390. Thus in Butcher v. Yocum, 11 P. F. Smith 168, notice from the grandfather of a minor was held sufficient, and the doctrine approved and applied in that case was, that it is not indispensable to the validity of notice of an equitable interest that it should come from the party or his agent; it is sufficient if it be derived aliunde; provided it be of a character likely to gain credit.

Now Newcomer testified that Mulliken was aware of the trouble about this property. Newcomer was prosecuted by Graham for the embezzlement of the cash received by him as Ms agent in the sale of Ephrata, and part of the consideration of that sale was the conveyance of the Mount Vernon street house to Graham. Mulliken was a witness at that trial. He was at the trial, said Newcomer, during the whole of it. Of course the matter of the contract was the subject of controversy. The memorandum of June 7th 1864, was read in evidence at that trial. Here was some, evidence that Mulliken knew, and that from a reliable source, that it was a part of the alleged contract that Graham was to have the property in question. But that is not all. Mulliken applied to Fitter to attend to the conveyancing on his behalf. Fitter knew all about it, and told Mulliken, for he himself testifies: “ I never knew that Charles Graham had any interest in it till I heard it at Fitter’s office. That was, that he had agreed to take it and afterwards refused, and Newcomer told me that was broken off.” But when informed by Mr. Fitter that there had been such a contract, was it prudent to rest satisfied with Newcomer’s declaration that it had been broken off? There was certainly enough in all this to have induced a careful man to inquire of Graham whether he had any claim or title before making the purchase. We think, therefore, that there was evidence in the case which justified the learned judge below in submitting the question of notice to Mulliken for the determination of the jury. This renders it unnecessary to consider how far the possession by Graham’s tenant operated to put Mulliken upon inquiry, so as at least to compel him to show that he had made application to the tenant on the ground to ascertain under whom and by what title he was in possession. No point as to this appears to have been made below, nor is it within any one of the assignments of error.

Judgment affirmed.