text:
    Steckel et al. versus The First National Bank of Allentown.
    A bank is responsible for the safe keeping of the money of a depositor, and it cannot set up fraud of its own officers as an answer to a demand for repayment.
    March 3d 1880.
    Before Sharswood, C. J., Gordon, Paxson, Trunkey and Sterrett, JJ. Mercur and Green, JJ., absent.
    Error to the Court of Common Pleas of Bucks county: Of January Term 1880, No. 188.
    Assumpsit by Alfred P. Steckel and others, partners, trading as the Columbia Slate Company, against the First National Bank of Allentown, to recover a balance of money deposited with said bank.
    The material facts will be found stated in the opinion of this court. At the trial before Watson, P. J., the plaintiffs presented the following points, to which are appended the answers of the court.
    2. That if the jury believe that the certificates of William H. Blumer & Co. were not accepted by the plaintiffs from the defendants as a payment and satisfaction fro tanto of the indebtedness of the bank, the plaintiffs are entitled to recover upon the original indebtedness.
    Ans. “ 1 can not so instruct you.”
    3. That whether the certificates of deposit were received by the plaintiffs in payment of the bank’s indebtedness to them, is a question of fact for the jury.
    Ans. “ I can not so instruct you.”
    4. That the burden of proving that the certificates of deposit were accepted by the plaintiffs in payment of the bank’s indebtedness to them, is upon the defendants.
    Ans. “ I can not so instruct you.”
    5. That if the jury believe that the plaintiffs were deceived by the fraudulent representations of the officers of the bank, and led to believe that the certificates of William II. Blumer & Co. were certificates of deposit in the First National Bank of Allentown, the reception of them by the plaintiffs was not a payment, and the plaintiffs would be entitled to recover.
    Ans. “ There is no evidence of fraud in the giving of the certificates by any officer or servant of the bank, except such as relates to the false representations made by the teller. These false representations must not affect' the bank with the consequence of fraud, if the money for which the plaintiffs’ checks were drawn was appropriated according to their directions.”
    In the general charge, the court, inter alia, said:
    “ The uncontradicted testimony in the cause is, that the plaintiffs had a running deposit account with the defendants during the years 1876 and 1877. Checks had been drawn against that account covering the whole of it except the sum of $251.43. This sum with interest from the month of March 1877 is admitted by the defendants to be due to the plaintiffs, and they are liable to a verdict and judgment for that amount.
    “ [It appears also by the testimony that three other checks were drawn by the defendants against their account for the sums of $700, $300 and $2000 respectively. They received from the teller of the bank in exchange for these checks three certificates of deposit, signed by William H. Blumer & Co.,, and acknowledging that the plaintiffs had deposited with them these respective amounts, payable, with interest upon the return of the certificates. These are dated September 23d 1876, December 1st 1876 and February 3d 1877.
    “You have heard the circumstances under which these chocks were drawn and these certificates of deposit were received. Prima facie this would be a payment by the bank to the plaintiffs, or to their order, of the amounts represented by the several checks and certificates.]
    “ The plaintiffs, however, say that the transactions were fraudulent, that the fraud was practised by the bank, or by its teller, upon them, which induced them to receive the certificates in exchange for their checks, and they now allege that they were not payments of the liability of the bank to them to the extent represented by the papers, but that, in consequence of this fraud, the original liability of the bank to them continued for these several sums, and they seek to recover the amount in this suit, in addition to the sum I have already named, which is admitted to be duo.
    “ Ordinarily, as between a debtor and a creditor, the giving of a note of the debtor himself, or the transfer of a note or other evidence of indebtedness of another person, will not operate as an extinguishment of the original debt which was due from the one to the other. It is true the parties may by their agreement give it this effect, but, in the absence of such an agreement, the presumption is that the new evidence of debt is received as a collateral security for the existing liability, and that it is not a discharge until satisfaction has been received by actual payment.
    “ This principle is invoked by the plaintiffs here. They say that the bank did not pay to them the money, the amount of which was named in these certificates, but that they gave to them in exchange these certificates of deposit with William H. Blumer & Co.; that this is merely evidence of indebtedness from them, and that, in the absence of any contract to receive these in payment, the presumption is, that they were not so received, and the original liability of the bank to them continues, notwithstanding the certificates were passed over to them.
    “ They say also that a fraud was practised upon them ; that the plaintiffs asked them for certificates of deposit, drawing interest of the Eirst National Bank of Allentown; that there was a conversation between one of them and the teller of the bank some days before the first of the certificates was given ; that the teller informed him that the bank did receive' deposits and issue certificates upon interest; that when he went there to obtain the certificate this first one was given to him, that he objected to it, saying that it was the certificate of William H. Blumer & Co., and not that of the Eirst National Bank. The teller replied it was the same thing, and that the bank would pay it or place it to his credit whenever he returned it. This was said in the presence of the cashier of the bank, and upon that assurance the testimony is, the certificate was received. The others appear to have been received afterward without question upon the subject so far as I remember.
    “ Afterwards, it seems, the plaintiffs grew dissatisfied with the certificates, and the same one to whom they were given visited the bank, met Mr. Blumer, the president of the bank, and had a conversation with him upon the subject. Mr. Blumer told him that the bank was then in the hands of the bank examiner; that he would be through in a few days when everything would be right, and he would be put right upon the books of .the bank; that he should not make himself uneasy upon the subject. A few days afterwards he called again in company with Mr. Roper, his counsel, when a conversation to the same effect took place between them and Mr. Blumer.
    “ [This case has been tried, and regarded very much as involving the question of the ordinary relation of debtor and creditor. I have been so disposed to look upon it myself, and it is only upon reflection during the argument of the case, that I have seen cause to change my opinion in this respect.
    “ I do not think that the relation existing between a bank and its depositors, is the same as that obtaining between a debtor and creditor in ordinary cases.] A bank is for the purpose of receiving deposits for safe keeping. A man puts his money there liable to be drawn out by him at any time when he may see fit, in the usual course of business. He may draw it out payable to himself upon his check, or he may by his check appoint it to be paid to another. [A hank is liable for its safe keeping, for its return upon demand, and it is not until demand is made upon it for payment and a refusal to pay that any suit can be maintained against it for a deposit in its care. It is not until that demand, I think, that the usual relation between debtor and creditor arises between them. Any disposition which a bank may make of the deposit by the direction of the depositor, is just as effectual a discharge to the bank, as an actual payment to him in cash.] [It makes no difference to the bank to whom that deposit is paid, so that it is paid according to the direction of the depositor; and when he gives to the bank a direction to pay to somebody else, or place to the credit of somebody else, and the bank pays or credits according to the direction, it is thus far released from liability to the original depositor.] The property which was before his, becomes the property of him to whom he has directed the transfer to be made. The bank is not affected by the transaction between the parties. It has nothing to do with them. Its only duty consists in paying over the money in their hands belonging to the depositor as he shall instruct.
    “ Now what is the evidence here ? Dr. Steckel went to the hank. He was desirous of obtaining interest upon a portion of the company’s funds that were deposited in this bank. He made inquiries. He was answered in the manner that has been testified ; and when he comes to receive a certificate of deposit, he is handed a certificate of William II. Blumer & Co., hut objects to it. His eyes show him the fact, that it is not the certificate of ‘ The First National Bank that there is not one word in it to make that bank liable ; and that it is the certificate of William H. Blumer & Co. He was assured by the teller, that the bank would pay them, and that it was the same thing as a certificate of the hank, and he could have the money on it or credit for it, at any time he might bring it to the bank.
    “ Now this was a new liability, if one was created — outside of these papers. Had the teller any authority thus to bind the bank ? It would be in effect a guarantee of the paper of William II. Blumer & Co., if he had any such authority to bind the hank.
    “ It is incumbent upon the plaintiffs to show either that it vras within the usual course of his employment as teller, or that he was specially authorized by the bank to make it. So far as I remember, there is no such testimony in this case ; and it follows, therefore, that the bank cannot be affected by any such contract, if it was made between Dr. Steckel and the teller.
    “It is undisputed that the checks of the plaintiffs went into the possession of the hank, and the positive testimony upon the part of the defendants is that these checks were placed by the bank to the credit of William II. Blumer & Co., as the proceeds of these certificates of deposit. Now the bank made nothing by this transaction. They simply charged the account of the plaintiffs, and they credited the account of William H. Blumer & Co. with the amounts stated in these checks. It was a transfer by direction of the plaintiffs of their deposit to the credit of Blumer & Co., and to that extent, in the absence of fraud by the bank, or by its officers, by which they would be affected, extinguished the liability of the bank to the extent of the amounts mentioned in the checks.
    “Was there fraud practised upon the plaintiffs which would affect the bank and render it liable, or continue its liability, for the amounts here claimed.
    “An employee, agent or officer, has authority to bind his principal just so far as he is authorized to do by his principal, either expressly or by employing him in a particular manner. There is nothing, here to show that the bank ever directed this teller to make these representations so as to bind it by contract. There is nothing to show that this was a representation made in his usual employment and course of business that would be fraudulent and thus affect the bank. It was, so far as appears, a representation outside of his authority. No authority has been shown, and in the absence of evidence of it you cannot presume it to exist.
    “ If an officer thus makes a fraudulent representation, tells things that are not true in fact, and thus induces one to act, his principal is not to be affected by that unless the principal profits by it. Then he would not be allowed to take advantage of the wrong of his servant, and would be held accountable so far as he reaped any benefit from it.
    “ There is nothing to show that the bank did reap any benefit from that transaction. The money that it received from the plaintiffs went immediately to the credit of William H. Blumer & Co., and I am not, therefore, able to see that there was any sufficient evidence of fraud either upon the part of the bank or of its officers such as would affect it and create or continue a liability. This being undisputed we instruct you, if you believe it, that your verdict should be for the plaintiffs for the amount which is admitted to be due at that time, to wit, $251.53, with interest from the time demand was made in March 1877.
    “ Counsel for plaintiffs asks that the question of fraud be submitted to the jury.
    “ By the court: — [I hardly think there was evidence sufficient to justify the jury in finding fraud if I should submit it. If there is not enough to justify the jury in finding that way, and if 1 would be bound to set aside the verdict upon a motion for a new trial if they found that there was fraud, then it is not proper to submit it to the jury.”]
    The verdict was for the plaintiffs for $289.28. After judgment thereon they took this writ, and alleged that the court erred in the answers to the above points, in the portions of the charge included in brackets, and the refusal to submit the question of fraud to the jury-

      E. J. Fox, Evan Holben and D. D. Roper, for plaintiffs in error.
    It is a well established rule of law that whenever and wherever fraud is involved in a case, or where the allegation of fraud is made in the trial of a cause, and there is any evidence, however slight, the courts are required to submit it to the jury : Frazer v. Hill, 2 Phila. R. 299; Hill v. Gray, 1 Stark. 352; Pilmore v. Hood, 5 Bing. N. C. 97. The bank having received the benefit of the money it is responsible to account for it to the plaintiffs, and even though the hank officers had no authority from the board of directors to make the representations to the plaintiffs to the effect that the certificates would be paid by the bank, and were the obligations of the bank for the money it received: Morse on Banks and Banking, pp. 12, 13, 91, 93, 105.

      Edward Harvey, R. E. Wright, Jr., and G. & H. Lear, for defendant in error.
    The hank is under an obligation to honor checks upon the balance in hand, whenever they are presented for payment. This contract is implied from the usual course of business. It is part of the tacit understanding that the deposit is left to be repaid whenever and to whomever the depositor shall appoint. The order for payment may be a verbal one: Morse on Banks and Banking 86 ; or, it may be according to the usages of the business, by written evidences, such as checks, drafts, &c. And when the checks are honored the liability is extinguished: Farmers’ and Mechanics’ National Bank v. King, 7 P. F. Smith 202. The drawing of a check on a banker without - specifying therein the fund drawn upon, is not ipso facto an appropriation of that fund; but if it be completed by presentation and payment, then it is: Loyd et al. v. McCaffrey, 10 Wright 410. It is an appropriation of the drawer’s funds in the bank’s hands for the amount named in it: Matter of Brown, 2 Story 502; Union National Bank v. Oceana County Bank, 80 Ill. 212.
    One who alleges fraud may affirm the contract and receive special damages, or disaffirm it and receive the consideration paid. Before he can do the latter he must return, or offer to return, whatever he has received under the contract. He must place the other party as nearly as possible in statu quo ; to do this it is incumbent on him to restore money, property or securities, unless they are absolutely •worthless; and the burden to show this is on the party who failed to restore them.
    From the nature of the transaction the plaintiffs knew the teller was acting ultra vires: Lloyd v. West Branch Bank, 3 Harris 174. The plaintiffs were able to read, and did read, the certificates, and were bound to know and understand their contents: Bigelow on Fraud 73; Grace v. Adams, 100 Mass. 507; Rice v. Dwight Manuf. Co., 2 Cush. 80; Rockafellow v. Baker, 5 Wright 321. If there is no sufficient evidence to justify an inference of the disputed fact, the court has the right, and it is its duty, to withhold it from the jury: Battles & Webster v. Laudenslager, 3 Norris 452.
   Mr. Justice Paxson

delivered the opinion of the court, May 3d 1880.

The principal cause of complaint in this case is that the learned judge of the court below withdrew from the jury the consideration of the question of fraud, upon the ground that there was not sufficient evidence to submit it. The plaintiffs kept an account with the corporation defendant, and were in the habit of making deposits and drawing checks in the usual manner. William H. Blumer was the president of the b,ank ; his son, Jacob Blumer, was the cashier. Three of the directors, including the said William H. Blumer, composed the banking-house of William H. Blumer & Co., which carried on business but a few hundred feet distant from the First National Bank of Allentown. The plaintiffs having money on deposit with the bank, and being desirous of obtaining interest-bearing certificates therefor, called at the bank for that purpose. Dr. A. P. Steckel, one of the plaintiffs, testifies as to what occurred substantially as follows: “ I went to the bank every week or two to make my deposits; sometime in August, when I made deposit, I asked the teller, George Straub, Does the First National Bank take any money on certificates ? He said, Yes, sir; do you want to leave us some ? I said No ; not to-day. I asked him whether the First National Bank issues certificates of deposit, and, as a matter of course, pay interest ? and he said, Yes. Then I came there again in September 1876, and made my ordinary deposit in the bank; and after we were through, I said to the teller that I would take the First National Bank certificates for $700; I filled out a check, and he handed me a certificate; I looked at the certificate for $700 ; it was to be made on demand, and asked him, Is this the First National Bank certificate ? The answer was, Yes, sir, it is. I then said, this reads Blumer & Co.; I want this distinctly understood, I want nothing but the First National Bank certificate. He assured me that this was one and the same thing; that it should pass to the credit of the company the same as it was before. With this assurance, I took that certificate. This was in the presence of the cashier of the hank, Jacob A. Blumer.” Two other certificates, aggregating, with the one above mentioned, the sum of §3000, were obtained under circumstances not essentially different. There was evidence that the president of the bank recognised them as binding upon the bank, and offered to reinstate the plaintiffs as they were before, when the bank examiner was through with his examination. That examination, however, resulted in the closing of the bank.

We must assume that the jury would have found the facts as testified to by the plaintiff Steckel. The facts established, we have a ease of palpable fraud. It is not an answer to say the plaintiffs ought not to have been deceived, and, with ordinary care, would not have been. The fact that the Blumers were respectively president and cashier of the National Bank, as well as loading members of the banking-house of Blumer & Co., was calculated to mislead and deceive; and when told in positive terms that the certificates, although signed by Blumer & Co., were the certificates of the bank, the plaintiffs may readily have believed it was all right.

It was urged, however, that, even if there was a fraud, it does not affect the bank; that an agent can only act within the scope of his authority, and that a bank is not bound by the fraudulent representations of one or more of its officers.

There is no doubt as to the general rule that an agent can only bind his principal so long as he acts within the scope of his authority ; but we do not think the principle applies in this case. A bank is responsible for the safe keeping of the money of a depositor, and it cannot set up the fraud of its own officers as an answer to a demand for repayment. Public policy forbids it.

The plaintiffs, after ascertaining the fraudulent character of the transaction, tendered the certificate to the bank, and demanded the payment of their original deposit. In other words, they rescinded the contract on the ground of fraud. If their allegations are true, they had a right to do so, and proceed upon the original cause of action.

The question of fraud should have been submitted to the jury. What has been said sufficiently covers the points involved.

Judgment reversed, and a venire facias de novo awarded.


source: Caselaw Access Project

author: Mr. Justice Sterrett

license: Public Domain

text:
    Russell’s Appeal.
    _ Rules of court required that every petition on which should be founded a citation to show cause should be verified by affidavit of the truth of the allegations of fact, and that the denial thereof, or statement of other facts by way of defence, contained in the answer, must in the same way be verified by the affidavit of the respective parties. These rules also provided that the petitioner might, within ten days, file a replication to the answer, verified in like manner; and, on hearing of the rule to show cause, the facts as stated in the petition or answer, and not denied in the manner aforesaid, should be taken pro confesso. In an application under these rules, to open a judgment and let the defendant into a defence, held, that in the absence of a replication to the answer, the facts therein stated by way of defence to the petitioner’s application were to be taken as admitted.
    March 3d 1880.
    Before Sharswood, C. J., Gordon, Paxson, Trunkey and Sterrett, JJ. Mercur and Green, JJ., absent.
    Appeal from the Court of Common Pleas of Bucks county: Of January Term 1880, No. 14.
    Appeal of Richard H. Russell, executor of the will of Harriet A. Hough, deceased, from the decree of the court refusing to open a judgment.
    The case arose on a confessed judgment, entered on a warrant of attorney, contained in a note for $3000, dated October 16th 1878, payable in thirty days, executed by Harriet A. Hough, the defendant below, to order of James S. Mann, plaintiff below. Judgment was entered the same day, but no execution was ever issued.
    Shortly thereafter, Harriet A. Hough applied for a rule to show cause why the judgment should not be opened, and filed an affidavit, which set forth “that the above judgment was entered on the 16th of October 1878, as appears by the record of the court, on a note with confession of judgment purporting to be signed by defendant with her mark, dated the said 16th of October 1878, and payable, thirty days after the date thereof to the order of the said plaintiff. Deponent cannot say whether or not she actually did sign the said note, but on or about that time she did sign with her mark a paper brought to her by the said plaintiff, which may have been the said note, and the circumstances connected with the signing of said paper are as follows: Deponent owned a farm and mill property near Doylestown for many years past, and still owns the same, having until within two months resided on the mill property; that she is now past seventy years of age, and has been for more than two years last past, and still is, totally blind, and for the past two or three years has had repeated attacks of sickness, which has more or less confined her to her bed and to her room for long periods qf time; that for many years past the said plaintiff, out of kindness to deponent, as he professed, has attended to the collection for deponent of the rent of the farm and mill property, which, together, aggregated about $950 a year; that deponent in October last had a severe attack of illness, from which she had little or no hope of recovery, and was confined to her bed; that on or about the 16th of October last past deponent was visited by said plaintiff, who said to her that she ought to compensate him for his many services to her, and to sign a note for some amount to him ; deponent replied that she desired to do what was right in the matter, and trusted to him; whereupon plaintiff prepared a paper for deponent to sign, which she did sign with her mark. And deponent further says, that at the time of said signing she was in a very weak condition, and did not expect to recover; that she retained no recollection of the contents of the paper, if she knew' it at the time, beyond the fact that she had signed something for plaintiff; that on her partial recovery, a few weeks afterward, deponent sent for her brother, in Philadelphia, to make inquiries concerning the paper she had so signed, which resulted in finding the said judgment-note on which judgment had been entered the same day as its date. And deponent further says, that she is not indebted to the plaintiff' for any such sum as named in said note, nor in any other amount, unless it is for money advanced by plaintiff in and about the repair of her farm property, which, in any event, does not exceed one or two hundred dollars, but as to the details of which deponent has no knowledge, nor unless deponent is indebted to plaintiff for commissions for the collection of the farm rent; but, as to this, deponent is not aware of whether he deducted the same or not, but Believes she is not so indebted, as plaintiff always gave deponent to understand that there were no commissions due him; but the only positive knowledge deponent has of any debt due by her to plaintiff is the amount of a note for $180, dated April 1st 1876, for money then advanced by plaintiff to deponent, and also a sum of money advanced at various times in small amounts, not exceeding in the aggregate the sum of $50.”
    On February 28th 1879, the court granted the rule, returnable on the 10th of March 1879.
    On the 19th of March 1879, Mann filed an answer, which set forth:
    “ That true it is that the said judgment was entered on the 16th of October 1878, upon a note, with confession of judgment, signed by the defendant with her mark, dated the 16th of October 1878, and payable to the plaintiff or his order, in the sum of $3000, thirty days after the date thereof, and witnessed by F. Swartzlander and L. Carwithen, and that the same was signed by the defendant with full knowledge and understanding of what she was doing.
    “ The respondent further says: That a number of years ago, prior to 1860, he was acting as the agent and business manager of the defendant, who was then a widow without children, her husband, John Hough, having died about the year 18 , and continued to act as such agent, until about the first day of February last.
    “ That the estate of the said Harriet A. Hough consists mainly of real estate, being a tract of about 102 acres of land, made up of a grist-mill property and farming land. That your respondent, during the period before mentioned, rented the said property for the defendant to various parties, the mill being rented to one person, and the farming land to other persons, and the annual rent received from all sources averaged about $950 a year, or more. That during all this period your respondent exercised constant supervision over the property, having the necessary repairs made; the dam supplying the mill with water having in one year broken three times, and your respondent having personally supervised the repairs to the same. Your-respondent further shows : That during the aforesaid period he has also exercised a personal supervision over the defendant’s more private and personal matters, securing for her all her personal comforts which she needed, and attending to her private matters, of her business or otherwise, which would make this answer too long if he attempted to specify.
    “ That during the past year your respondent erected a new barn, wagon-house, hog-pen and chicken-house, upon the property, at the request of the defendant, employing mechanics, purchasing materials, and exercising a personal 'supervision over the erection of the buildings, at very great inconvenience and disadvantage to himself. That during the period aforesaid your respondent, for a number of years, resided at Norristown, and was at very great disadvantage and pecuniary loss in going backwards and forward in the performance of his duties as the' representative and agent of the defendant, and desired to be relieved upon various occasions, but that the defendant declined to release him, and promised to compensate him liberally for his services and any pecuniary loss or disadvantages which he might incur.
    “But there never was any specific contract as to his compensation between himself and the defendant, but that at various times when the respondent mentioned the matter of his compensation to her she invariably promised to pay him, and to pay him well, but asked that the time of payment might, be postponed until her property should be sold.
    “ That the income derived from the said property had been applied by the respondent, under the direction of the defendant, in part to the liquidation of certain indebtedness against the land, and your respondent, knowing that the balance of her income was necessarily consumed by her for purposes of living, was not inclined to exact the payment of his compensation.
    “ The respondent further says that, prior to the date of the execution of the nóte, the defendant expressed her desire to pay the respondent, or to secure him; that she requested him to procure a judgment, so that lie might he secured in the real estate. That your respondent, in pursuance of her request, procured the note in question to be drawn in an amount which she had directed, your respondent and the defendant having gone into an examination'of the business transacted, and the defendant herself having designated the sum named as being the proper amount of the compensation. That the note in question was executed by the defendant, in the presence of Dr. Frank Swartzlander, who had been her attendant physician for several years, and also in the presence of Lemuel Carwithen, who was a neighbor living near the then residence of the defendant, and who happened to be at the mill upon that occasion. That the consideration of the note was fully explained in the presence of the said two witnesses by the defendant herself, and also by the respondent in her presence; that the note was read over to her by Dr. Swartzlander, and she stated that she understood it, and desired to sign it; that the defendant did sign the note with a full understanding of its contents, and that the same was her voluntary act.
    “ Your respondent further says that during the whole period of time for which he has acted he has never been paid one dollar by the defendant, or any one for her, for services rendered by him ; that it is not true that these services were to be rendered in consideration of kindly feeling, and without compensation, but that, on the contrary, it was always expressly understood and agreed that he was to he paid, and that the defendant is now honestly indebted to him for the full amount of the said judgment-note.”
    The following extract is from the rules of the Court of Common Pleas of Bucks county :
    “ § 7. Every petition, on which shall be founded a citation or rule to show cause, shall be verified by affidavit of the truth of the allegations of facts therein. * * * At or before the time fixed for the return of the citation or rule the respondent may file an answer thereto. If the answer shall contain any denial of the allegations of fact in the petition, or statement of new facts by way of defence, it shall be verified by affidavit. On the filing of the answer the petitioner may, within ten days after notice thereof, file a replication thereto, verified in the same manner. * * * The court may by special order extend or diminish the time for the service of citation or rule or for the filing of answer or replication. On the hearing of the citation or rule to show cause, the facts so stated in the petition or answer, a.nd not denied in the manner aforesaid, shall be taken pro oonfesso.”

    No replication was filed to the above answer of the respondent, and on August 12th 1879, on hearing of the affidavit and answer, the court discharged the rule from which order this appeal was taken.

      Hector T. Fenton, for appellant.
    The plaintiff stood in a confidential relation to the defendant, and the burden is on him to show clearly that the transaction was perfectly fair and honest, especially so in the case of an aged person, in the weakness of mind attendant on severe illness', and totally blind, and, therefore, unable to read or see what she was doing.

      George Ross and L. L. James, for appellee.
    More than six months elapsed, from the date of the institution of the proceedings to open the judgment, to the period when the matter was finally disposed of by the court, during a large portion of which time the defendant was not sick. When the rule came up for argument no replication had been filed by the defendant, as required by the rules of court and the unvaried practice under them. The court below, therefore, took the answer of the plaintiff as admitted to be true by the defendant, and that shows there was a good consideration for the note.
   Mr. Justice Sterrett

delivered the opinion of the court, March 22d 1880.

In such cases as this the rules of the court below require the allegations of fact in the petition, the denial thereof, or statement of other facts, by way of defence, contained in the answer, to be verified by the affidavits of the respective parties. They also provide that the petitioner may, within ten days, file a replication to the answer, verified in like manner; and, on hearing of “ the rule to show cause,” the facts, as stated in the petition or answer, and not denied in the manner aforesaid, shall be taken pro confesso. This very properly assimilates the proceeding to the practice in equity, to which, in fact, it belongs. Under our blended system of law and equity, a petition to open a judgment and let the defendant into a defence takes the place of a bill. In the absence of a replication to the answer, the facts therein stated by way of defence to the petitioner’s application were to be taken as admitted.

The answer to the petition was filed March 19th 1879, and without replication thereto, as provided by the rule of court, or any testimony on either side, the case was set down for hearing on the petition and answer, and after being continued from June until September, the court, in the exercise of that sound discretion with whieh it-is invested in such cases, refused to open the judgment. The single question for consideration is whether the discretion was rightly exercised.

The note on which the judgment was entered is attested by two subscribing witnesses; and the petitioner does not deny that she signed it as it appears of record. After stating her physical condition, &c., and that the appellee had for many years attended to the collection of her rents, she says that on or about October 16th 1878, he called on her and said, “she ought to compensate him for his many services,” and give him a note. To which she replied, “ that she wished to do what was right in the matter, and trusted to him.” Whereupon he prepared a note for her to sign, “which she did sign with her mark.” She further says that she retained no recollection of the contents of the paper, beyond the fact that she had signed something for him, but ascertained after-wards that it was the note on which judgment had been entered. This is virtually an admission that the note was given in consideration of the services referred to. She then speaks of her indebtedness to him; and says, in substance, that while she may have been indebted for money advanced in and about the repair of her property and for commissions on rents collected, the only positive knowledge she had of any debt due him was a note of §180, dated April 1st 1876, for money loaned, and a further sum, not exceeding in the aggregate $50, advanced at various times in small amounts. The affidavit, as a whole, amounts to little, if anything, more than a denial that there was full consideration for the note, and even that is somewhat doubtfully expressed.

On the other hand, the appellee in his answer alleges that he acted as her agent and business manager for a period of nearly twenty years, for which he had never been compensated; that, prior to giving the note in question, she expressed a desire to pay him, and requested him to procure a judgment so that he might be secured in the real estate; that, in pursuance thereof, he procured the note to be drawn in the sum which she designated “ as the proper amount of compensationthat the note so prepared was executed in the presence of the subscribing witnesses, Dr. Swartzlander, her physician, and Mr. Oarwithen, one of her neighbors ; that the consideration of the note was fully explained in their presence, and after it was read over to her by Dr. Swartzlander she stated that she understood it, and desired to sign it; and did then and there sign it, voluntarily and with a full understanding of its contents. The answer further avers that it was always expressly understood and agreed that the services rendered were to be compensated; that nothing was ever received on account, and that she was justly indebted in the amount of the note.

The answer is full and explicit as to the execution of the note and the consideration for which it was given. In the absence of a replication or traverse of the answer, or any testimony tending to rebut the bona fides of the transaction as therein detailed, the court was clearly right in discharging the rule. Under the circumstances, the learned judge could not have done otherwise without utterly ignoring his own rules of court, and violating well-established principles of practice. Nearly six months elapsed between the filing of the answer and the hearing. Ample time was thus afforded in which to file a replication and take the testimony of the subscribing witnesses and others. The fact that it was not done justifies the inference that their testimony, if it had been taken, would have strengthened the njaterial allegations of the answer. It is not to be presumed that learned counsel, fully awake to the interests of his client, would fail to file a replication to the answer, and thus prevent the allegations of fact therein contained from being taken pro confesso under the rule, if he had thought those allegations could have been successfully controverted, or that he would submit the case without calling the subscribing witnesses to the note unless he was satisfied that their testimony would not strenghten his client’s case.

It is very true that, in cases where fiduciary relations are shown to have existed, courts will exercise great liberality in granting equitable relief, but this does not mean that established rules of evidence and practice are to be utterly disregarded, and judgments opened upon a mere suggestion of bad faith or want of consideration.

We think the discretion of the court below was rightly exercised in discharging the rule to show cause.

The order of court discharging the rule, &c., is affirmed, and appeal dismissed at the costs of the appellant.

Mr. Justice Trunkey filed a dissenting opinion, in which Chief Justice Sharswood concurred.


author: Mr. Justice Paxson

text:
    Fisher versus Ball et al.
    1. Where evidence is offered to prove matters growing out of the dealings of the parties, and which was part of the res gestee, it is admissible under the plea of non assumpsit without notice of special matter.
    2. A. was authorized by B. to sell mowers and reapers at a certain point. Sales at that point proving unsuccessful, B. directed A. to reship the machines to other points. In an action on a book-account by B. against A., to recover a balance due, A., under the plea of non-assumpsit, and without having given notice of special matter, offered to prove that all machines not accounted for had been reshipped under orders from B., and that a proper statement of the account would show a balance in favor of A. : Held, reversing the court below, that the evidence was admissible.
    March 3d 1880.
    Before Sharswood, C. J., Gordon, Paxson, Trunkey and Sterrett, JJ. Mercer and Green, JJ., absent.
    Error to the Court of Common Pleas of Berks county: Of January Term 1880, No. 9.
    Assumpsit by E. Ball & Co. against Peter W. Eisher, to recover a balance alleged to be due on a book account.

      The defendant pleaded non assumpsit, payment with leave, &c.
    It appeared that in 1867, the plaintiffs entered into a contract with defendant to act as their a-gent for the sale of mowers and reapers at Topton in Berks county, and a number of machines were forwarded to Eisher for sale. The agency at Topton not proving successful, machines were re-shipped by the defendant to different places, as plaintiffs from time to time directed. In 1871, the general agent of the firm of Ball & Co., was sent to make a settlement with Fisher, and to close up the business with him. A settlement could not be effected, and the plaintiffs brought this suit. The plaintiffs admitted that Fisher had made re-shipments, but still claimed that defendant was indebted to the firm in the sum of $301.44. The defendant then offered to prove, that “ one machine, for which the defendant is charged $247.50, shipped to Lewisburgh, August 24th 1869, and a raker attachment for which hois charged $67.50, shipped April 9th 1873, to plaintiffs at Canton, Ohio, were shipped by plaintiffs’ order; that he is entitled to credit for said machine and raker attachment of $315, and that he is not allowed such credit in plaintiffs’ claim, and that by such allowance the plaintiffs will fall in defendant's debt.”
    The plaintiffs objected : 1. Because the defendant’s counsel having received notice of special matter, under our rules of court on March 28th 1879, and not having furnished the plaintiffs a specification in accordance with said rules, this evidence cannot be admitted under the plea of non assumpsit alone. 2. The plea of defalcation having been entered April 28th 1879, after the time had expired for furnishing a specification in accordance with the notice aforesaid, this evidence cannot be admitted under the plea of defalcation.
    The court, Sassaman, A. L. J., rejected the offer, saying: “The pleas in this case were non assumpsit, and payment with leave to alter and amend. The plaintiffs, on March 28th 1879, served notice under our rule of court 24th, sect. 9th, to furnish notice of special matter under the plea of ‘ leave ’ within twenty days from service. This was not done, and on April 28th 1879, defendant adds this plea of defalcation, without serving specifications of special matter to he offered in defence. Wo do not think that under the pleadings as they stand now, when taken together, that such evidence is admissible.”
    The rule of court (rule 24th, sect. 9th) is as follows :
    “ When there is leave, under a general pica, to give the special matter, fraud, want of consideration, particular payment or defalcation, in evidence, or the defendant pleads set-off and does not set forth the matter specially in his plea, or pleads the general issue with leave to justify a specification in writing of the special matter, fraud, want of consideration, payment, defalcation or set-off, or the particular matters on which he intends to rely in justification, if demanded in writing, shall be given to the plaintiffs within twenty days after such demand, otherwise no evidence shall be admitted of a special matter hereby required to be specified.”
    Yerdict for plaintiffs, and after judgment defendant took this writ and alleged, inter alia, that the court erred in rejecting his offer of evidence.

      H. H. Schwartz and A. G. Green, for plaintiff in error.
    What was offered to be proved was not special matter, but facts growing immediately out of the dealings of the parties. It was part of the res gestee. The plaintiffs had ordered the shipment of the goods. The defendant had complied, and offered to show this by way of defence. It was clearly evidence under the general issue plea of non assumpsit: Moyer’s Adm’rs v. Fisher, 12 Harris 515; Covely v. Fox, 1 Jones 174; Hobson v. Croft, 9 Barr 364; Irwin v. Leibert, 5 W. & S. 105; Beals v. See, 10 Barr 59; Gaw v. Wolcott, 10 Id. 43.

      William P. Bard and Horace A. Yundt, for defendants in error.
    The pleas in this case are: February 5th 1879, defendant pleads non assumpsit, and payment with leave to alter, amend, &c. April 28th 1879, defendant adds the plea of defalcation.
    The first is a common form of plea in our court, and the words “with leave, &c.,” have always been taken to mean “with leave to give special matter in evidence.” This is the interpretation put upon these words, and is in accordance with the practice that prevails in our court.
    This suit having been brought on November 1st 1872, the alleged shipment of the raker was after the bringing of the suit and therefore not admissible in evidence. The evidence was offered as a whole and rejected as a whole.
   Mr. Justice Paxson

delivered the opinion of the court, May 3d 1880.

The court below rejected the offer of evidence embraced in the first assignment, upon the ground that no notice had been given of special matter. The offer was made under the plea of non assumpsit, and no other objection was made to its admission. The evidence was clearly relevant, and required no notice of special matter. It referred to matters growing out of the dealings .of the parties, and was part of the res gestee. The defendant stood charged with a certain number of mowers and reapers sent to him by the plaintiffs for sale upon commission. The defence was that all of the machines not sold and accounted for, had been reshipped upon the order of plaintiffs. This was a good defence if made out, and the rejected evidence tended to prove it. We think it was admissible under the plea of non assumpsit. This is a very broad pica, and by it the defendant puts his antagonist upon proving his whole case, and entitles himself to give in evidence anything which shows that, at the time the action was commenced, the plaintiff, ex cequo et bono, ought not to recover: Gaw v. Wolcott, 10 Barr 43; Beals v. See, Id. 56. Nor do we think it material that the offer referred to one machine that had been reshipped since the commencement of the suit. It appears, by the statement of the plaintiffs, that upon the trial a credit was given for certain machines shipped since suit brought, and no objection was made below to the admission of the evidence upon this ground.

The evidence referred to"in the second and third assignments was properly rejected. It would have been competent to show the articles were shipped. But the evidence offered did not amount to such proof. The mere production of the books of the railroad company, with the shipper’s receipt, did not prove a shipment. They might have been made evidence, if the shipping clerk or other proper person, had been called for that purpose. But standing alone, and unsupported and unexplained, they were not of themselves competent to affect third parties.

Judgment reversed, and a venire facias de novo aw'arded.


text:
    Ziegler versus The First National Bank of Allentown.
    The cashier is the executive officer of a bank, and authorized by the very nature of his office to receive money on deposit, and after receiving it, no trick nor fraud on his part, by means of which the money was passed over to a firm in which the bank officers were largely interested, can absolve the bank from its liability.
    March 4th 1880.
    Before Sharswood, C. J., Gordon, Paxson, Trunkey and Sterrett, JJ. Mercur and Green, JJ., absent.
    Error to the Court of Common Pleas, of Lehigh county; Of January Term 1880, No. 194.
    Assumpsit by Philip Ziegler against the First National Bank of Allentown, to recover the sum of $2980.80 deposited with said bank. .
    The defendant was a national bank, organized and incorporated under the national banking laws, and was located and doing business in the city of Allentown. It suspended some time in March or April 1877. At the time of its suspension and for a number of years prior thereto, William II. Blumer was the president of the bank, Jacob A. Blumer, a son of William II. Blumer, cashier, George E. Straub, teller, and William II. Blumer, Jesse M. Line and William Kern were among the board of directors. There was also at the same time a private banking house in the city of Allentown, composed of William H. Blumer, Jesse M. Line and William Kern, trading under the firm name of William H. Blumer & Co. In March 1877, Blumer & Co. failed. On October 11th 1876, and for a long time prior thereto, the firm of William H. Blumer & Co. was largely insolvent, and this insolvency was known to the officers of the First National Bank of Allentown.
    At the trial, the plaintiff made the following offer. To prove “ by Philip Ziegler, the witness on the stand, that prior to 1874, the plaintiff kept his accounts with and did his banking -business at the Union National Bank of Reading, Pa., that some time in the year 1874 the plaintiff went to the First National Bank, and in the bank he met Jacob A. Blumer, the cashier of said bank, and told him that he wanted to deposit some money in said bank; that he wanted to deposit it in the bank so that he could draw his checks against it whenever he wanted to; that Jacob A. Blumer, the cashier, then said that that was all right; that he then gave the money to Blumer, who took it and proposed to give the plaintiff a certificate of deposit; that plaintiff then said he wanted no certificate of deposit,' that at the Union National Bank of Reading he had a deposit book and checks to draw against his accounts, and that was the way he wanted his accounts in the First National Bank; that the said Blumer then said that that was not the way they did business, that they gave no books, but gave certificates' of deposit, that that was the way they did business, that it was all the same; that he could draw his checks on the bank and that bank would pay them ; and that the said Jacob A. Blumer then told and assured plaintiff that it was all right, that his money was deposited in the First National Bank of Allentown ; in consequence of which plaintiff took said certificate of deposit, not being able to read the same, and believing and being assured by the said Jacob A. Blumer that it was the certificate of the First National Bank; that at the same time the said Jacob A. Blumer gave plaintiff a number of blank checks on the said bank ; that after that plaintiff deposited money from time to time and drew checks on the First National Bank from time to time up to October 11th 1876, which checks were all duly paid by said bank ; that from time to time he made settlement of his accounts, when the checks paid by the bank were surrendered to him and new certificates given to plaintiff; that on October 11th 1876, he made a settlement with the officers of the bank and deposited some more money, and that the balance then due him was $2980.80, for which he received a certificate from the officers of the bank, which in fact was the certificate of the banking-house of William H. Blumer & Co., that up to this time all certificates plaintiff had received were surrendered up to the First National Bank, and plaintiff does not know, and never did know, whether they were the certificates of William H. Blumer & Co., or of the First National Bank ; that when plaintiff received the certificate of October 11th 1876, lie did not know that it was the certificate of William H. Blumer & Co., but relying upon the representations and assurances of the said Jacob A. Blumer, that he had his money deposited in the First National Bank, he believed said certificate to be a certificate of said bank, and that he never discovered that said certificate was the certificate of William H. Blumer & Co., and not of the First National Bank, until some time in the spring of the year 1877, after the failure of the First National Bank, and of Wiliiam H. Blumer & Co.; that after October 11th 1876, plaintiff drew a number of checks on said First National Bank, aggregating §180.85, which were paid by said bank; that the plaintiff never knew of the existence of the firm of William II. Blumer & Oo., until after their failure in 1877, never dealt with said firm, and that all his dealings in the premises were with the officers of the First National Bank. This to be followed by proof that on October 11th 1876, and for a long time prior thereto, the firm of William II. Blumer & Oo. was largely insolvent, which insolvency was known to the officers of the First National Bank, and that on that day the account of said William II. Blumer & Co. in the First National Bank was overdrawn to a large amount, and that said account remained overdrawn down to the time of the failure of William H. Blumer & Co. and the suspension of the said First National Bank, and that at the time of said failure, said overdraft exceeded §100,000, and that on October 11th 1876, the officers of said First National Bank, without the knowledge and consent of plaintiff, entered said balance of §2980.80, then due plaintiff, to the credit of William H. Blumer & Co., on the books of the 'hank, for the purpose of making good in part said overdraft of William H. Blumer & Oo.
    The defendant objected, on the ground that the evidence was irrelevant, incompetent and inadmissible under the pleadings. The court sustained the objection and charged' the jury, “ there being no evidence to submit to you, under the view of the law the court takes in this case, I instruct you to render a verdict in favor of the defendant.”
    Verdict accordingly, when plaintiff took this writ and alleged that the court erred in rejecting his offer.

      John Rupp and John D. Stiles, for plaintiff in error.
    The cashier of an incorporated bank is the general executive officer to manage its affairs in all things not peculiarly committed to the directors; he is the agent of the corporation, not of the directors : Bissel v. First National Bank of Franklin, 19 P. F. Smith 415; Harrisburg Bank v. Tyler, 3 W. & S. 376; Bank of Penna. v.
      Reed, 1 W. & S. 101; Story on Agency, sects. 114, 115; Bank of Kentucky v. Schuylkill Bank, 1 Pars. Eq. 180; Lloyd v. The West Branch Bank, 3 Harris 172. A bank is liable for the frauds or mistakes of its cashier: Angell & Ames on Corp., sect. 11. The defendant was estopped from denying that plaintiff was a depositor in and a creditor of the bank, and that the certificate of October 11th 1876 was the certificate of the bank. By the payment of interest, the bank was precluded from denying its liability: 2 Parsons on Contracts 793; Pickard v. Sears, 6 A. & E. 469; Commonwealth v. Moltz, 10 Barr 527 ; Crowell v. McConkey, 5 Id. 168, 176; Waters’s Appeal, 11 Casey 523 ; Woods v. Wilson, 1 Wright 379 ; Hill et al. v. Epley et al., 7 Casey 331; Miranville v. Silverthorn, 12 Wright 147. Again, where a party does acts or makes assertions which amount to an explanation of the contents of a written paper, the party dealing with him may rely thereon and need not ask to have the paper read or explained.

      Edward Harvey and R. E. Wright, Jr., for defendant in error.
    The liability of the principal depends upon the facts that the act was done in the exercise and within the limits of the powers delegated: Thayer v. Boston, 19 Pick. 511; Fogg v. Griffin, 2 Allen 6; Little Miami Railroad Co. v. Wetmore, 19 Ohio St. 110; Smith’s Master and Servant 150; Lloyd v. West Branch Bank, 3 Harris 174; Kirkpatrick v. Winans, 1 C. E. Green 408. A person who cannot read should require the contract to be read to him; and if he does not, he cannot on principle, complain that the contents were falsely stated to him : Ellis v. McCormick, 1 Hilt. 313; Greenfield’s Estate, 2 Harris 504; Grace v. Adams, 100 Mass. 507 ; Rice v. Dwight Manufacturing Co., 2 Cush. 80; Hallenbeck v. Dewitt, 2 Johns. 404; Pennsylvania Railroad Co. v. Shay, 1 Norris 198 ; Adams v. Bachert, 2 Id. 524. If the contract is to be rescinded, the parties must be placed as far as possible in the situation in which they stood before the transaction: Bigelow on Fraud 409; Neblett v. MacFarland, 2 Otto 101; Kerr on Fraud 325; Babcock v. Case, 11 P. F. Smith 427 ; Roth v. Crissy, 6 Casey 145; Beetem v. Burkholder, 19 P. F. Smith 249 ; Morrow v. Rees, Id. 368; Moore v. Shenk, 3 Barr 12; Pearsoll v. Chapin, 8 Wright 9 ; Turnpike Company v. Commonwealth, 2 Watts 433; Piper v. Slonaker, 2 Grant 113; Jackson v. McGinness, 2 Harris 331; Ives v. Hiles, 2 Watts 323; Bell v. Hartman, 9 Phila. R. 1.
    [See Steckel v. The Bank, ante, p. 376, and Resh v. The Bank, post, p. 395. — Rep.]
   Mr. Justice Paxson

delivered the opinion of the court, May 3d 1880.

When the plaintiff took his money to the First National Bank of Allentown, and handed it to the cashier for deposit, the bank became responsible therefor. The cashier was the executive officer of the bank, and authorized by the very nature of his office to receive money on deposit. After receiving it, no trick or fraud on his part, by means of which the money was passed over to Blumer & Co., a firm in which the bank officers were largely interested, and appeared to have had the control, could absolve the bank from its liability. No class of men have the confidence of the people to a greater extent than bank officers. Depositors do not deal with them at arms’ length, and can be imposed upon with the greatest ease by such officials. It would be monstrous to allow them to take advantage of the ignorant and unwary, by reason of their position and the confidence which it inspires. It was doubtless a misfortune to this bank to have unworthy officials, if such should prove to be the case. It certainly was unwise to permit its chief officers to occupy a dual position with divided interests, but the consequences resulting therefrom cannot be visited upon those who dealt in good faith with the bank.

This case is ruled in a great measure by Steckel v. The Bank, ante, p. 376. 'It was error to reject the evidence contained in plaintiff’s offer. The facts offered to be proved amounted to a fraud upon the plaintiff, and he was entitled to have that question passed upon by a jury.

Judgment reversed, and a venire de novo awarded.


text:
    Resh versus The First National Bank of Allentown.
    1. In a suit by a bank upon a promissory note, the defendant offered to prove that the note in suit was procured from defendant by fraud; that ho went to the bank to receive payment of a certificate of deposit; and that when the money was paid he signed a receipt, which turned out to be the note on which suit was brought. The court below rejected the offer : Held, that it should have been admitted.
    2. Steckel v. Bank, ante, p. 376, and Ziegler v. Bank, ante, p. 393, followed.
    March 4th 1880.
    Before Sharswood, C. J., Gordon, Paxson, Trunkey and Sterrett, JJ. Mercur and Green, JJ., absent.
    Error to the Court of Common Pleas, of Lehigh county: Of January Term 1880, No. 231.
    Assumpsit by the First National Bank of Allentown against William Resh.
    At the trial, before Albright, P. J., the plaintiff put in evidence a note drawn by the defendant for $500, to the order of himself and endorsed by him in blank.

      The defendant then made the following offers : 1. To prove that at various times, he deposited moneys at the First National .Bank, of Allentown, Pennsylvania, receiving certificates of deposit, which he supposed to be certificates of deposit of the First National Bank; and that on the 7th of March 1877, he, presented, one of these certificates at the First National Bank, and demanded payment therefor, and was requested by an officer of the bank to sign a paper, which defendant supposed at the time to be a receipt for the sum of $500, that being the amount of the certificate of deposit, which defendant presented for payment.
    Objected to as incompetent and irrelevant, because the offer proposes to prove the supposition of the defendant; and because there is no offer to show, that there was any fraud or imposition practiced upon the defendant at the time the note was signed. Objected sustained and the testimony excluded.
    2. To show that when he presented the certificate of deposit for $500, to the plaintiff, which he had received from the First National Bank, he was requested to sign a paper as a receipt for the sum of $500; that the defendant signed said paper under the representations by the officers of the bank; that it was a receipt, and that deceit and fraud was practiced by the officérs of the bank, when they procured his signature to the note in suit; and that the signature thus obtained, was the signature to the note in suit and not a receipt.
    Objected to as incompetent and irrelevant, because the offer discloses no evidence of fraud or deceit, and no facts from which the jury could draw any such inference. Objection sustained and the evidence excluded.
    8. To show that the note in suit was procured from the defendant by the plaintiff, by representing to him at the time he signed the same, that the paper he signed and was requested to sign, was a receipt for the sum of $500 ; and that the said sum of $500 was paid to the defendant upon a certificate of deposit, presented by the defendant to the plaintiff for payment.
    Objected to as incompetent and irrelevant; evidence excluded.
    4. To show that on the 7th of March 1877, he presented what he believed to be a certificate of deposit of the First National Bank, at said bank for $500, and requested the payment thereof; and that he was paid said sum of $500 upon a certificate of deposit obtained from the bank, being presented to the bank by the defendant ; and that he was asked by an officer of said bank to sign a 'paper, and that the paper which he signed was represented to be a receipt, and which the defendant now claims to be the note in question; and that the defendant could not read or speak the English language.
    Objected to as incompent and irrelevant; objection sustained.

      The verdict was for plaintiff for the amount of the note, interest and costs, and after judgment thereon, defendant took this writ and alleged, that the court erred in rejecting the above offers. .

      R. Clay Hamersly and Thomas B. Metzger, for plaintiff in error.
    The case of Kinzer v. Mitchell, 8 Barr 64, decides, that the acts and declarations of the parties, in the presence of each other, or the acts and declarations of the party to be affected thereby, which constitute part of the res gestee, and enter into the character of the whole transaction, are evidence, and are to be taken together, as a connected link of a chain of circumstances, to establish a case of fraud. In fact, all our offers contain propositions to show fraud, if not in the words used by the parties to the contract, then by their acts.

      Edward Harvey and R. E. Wright, Jr., for defendant in'error.
    Certainly the supposition of a party is no criterion by which to measure the contract relation. Even the intention of a party to a contract cannot be-shown, But must bo gathered from what was said and done before and at the consummation of it: Spencer v. Colt, 8 Norris 314. Before plaintiff obtained the money, he was requested to sign the note in suit. Suppose they did tell him it was a receipt; he could have read it or he could have had it read. In this particular he neglected to do what he should have done: Adams v. Bachert, 2 Norris 524; Pennsylvania Railroad Co. v. Shay, 1 Id. 198.
    In a case like this, an implication of damages cannot be made. Resh has our money and we have his note, and by paying that note, Resh stands just where ho did when he called at the bank. [See Steckel v. Bank, ante, p. 376; and Ziegler v. Bank, ante, p. 397. — Rep.]
   Mr. Justice Paxson

delivered the opinion of the court, May 3d 1880.

While this case differs somewhat in its facts from Ziegler v. The Bank, and Steckel v. The Bank, just decided, it is similar in principle, and comes within the rulings of those cases.

The third assignment covers all that it is necessary to discuss. The court rejected evidence offered to prove that the note in suit was procured from defendant below, by fraud on the part of the bank officers; that he -went to the bank to receive payment of a certificate of deposit for $500; that when the money was paid, he signed a paper represented by the bank officers to be a receipt for $500, but which afterwards turned out to be a note for $500, upon which this suit was brought.

It is true the plaintiff denies the facts upon which this offer was based. But this denial goes for nothing, as the jury were not allowed to pass upon them.

The evidence should have been admitted. Judgment reversed, and a venire facias de novo awarded.


author: Mr. Justice Gordon

text:
    City of Reading versus Althouse.
    1. By the Act of April 14th 1853, applying to the “ Reading Water Company,” it was provided that where the corporation permanently appropriated to its use such springs or streams as it might select for water purposes, compensation should be made to the owners for damages sustained. Held, that this act applied not only to the owners of natural channels, but to those who owned artificial watercourses which had been used from time immemorial.
    2. In 1769 L. owned certain lands, through which flowed a stream and upon which land was an existing ditch which the stream fed with water for the purpose of irrigating the land. He divided the lands and devised them, allowing to each portion the use of tile water from the ditch at stated intervals. A. derived title through L. to one of these portions. In 1874 the city of Reading, which is situated on one of the tributaries of the stream from which the. ditch is supplied, diverted the water from this tributary for the use of the city. In an action by A. for damages, Held, that the action would lie under the Act of April 14th 1853. Held, further, that section 8, article 16, of the new constitution protects such an owner, as that section provides for the making of compensation not only for the taking of private property for public use, as was the case theretofore, but also for its injury or destruction.
    3. The doctrine that an action for consequential damages against a corporation possessed of the right of eminent domain cannot be sustained is reversed by the new constitution, which has provided a different rule.
    March 4th 1880.
    Before Sharswood, C. J., Gordon, Paxson, Trunkey and Sterrett, JJ. Mercur and Green, JJ., absent.
    Error to the Court of Common Pleas of Berks county: Of January Term 1880. No. 247.
    This was an appeal by the City of Reading from, the judgment of the court confirming the report of. viewers to determine what damages William Althouse had sustained by reason of the taking ol water by said city for its uses.
    The City of Reading purchased the property and franchises of the Reading Water Company in 1865. Prior to this time the city had purchased a tract of land, known as Ohlinger’s Mill, through which the Ohlinger stream flowed. In 1872, the city councils passed the necessary legislation to authorize the water department to bring in the waters of the Ohlinger creek from a point on the city tract, near the Ohlinger mill, to the city reservoir. A dam was built and pipes laid from it to the reservoir, and in July 1874, the water was diverted from the stream. William Althouse owns a farm in Exeter township, some five miles from the point of diversion. He claimed damages for the loss of water used in irrigating his meadows. This water does not flow into his land through its natural channel, but is diverted from its natural channel into an artificial irrigating ditch at a point on the stream about four miles from the city dam and one mile above plaintiff’s farm. This ditch irrigates the lands of a number of persons, and existed in 1769. It was not known when it was made. It was used for the purpose of irrigating the lands of Mordecai Lincoln. The water was derived from the Antietam creek. Lincoln devised those lands, having previously divided them, and assigned to each its proportion of the water, to be used for irrigation, and arranged that each portion should have a certain period of time in which to use the water. Althouse derived title from Lincoln, with the right thus to use the water from the ditch. The Ohlinger c reck is a tributary of Antietam creek.
    The proceedings were under the supplement of April 14th 1853 (Pamph. L. 416) to the Act of March 16th 1819, creating the “ Reading Water Company,” and authorizing it to supply the borough of Reading with water. The 4th section of the supplement of 1853 provided, “ That the Reading Water Company shall have power and are hereby authorized from time to time hereafter, as they shall deem necessary, permanently to appropriate to their use such spring or springs, stream or streams of water as they may select, for the purpose of bringing into the city of Reading an additional supply of water; and any damage sustained by the owners of land upon which such spring or springs, stream or streams of water is or are situated, or through which it or they shall flow, by reason of the permanent appropriation as aforesaid, shall be ascertained, and compensation made in the manner hereinafter provided.”
    There was considerable conflicting testimony as to the damages which had been occasioned by the diversion of the water.
    The plaintiff offered to show: 1st. “ The effect of the appropriation of the Ohlinger or Antietam creek by the city of Reading upon the quantity of water flowing through the race or watercourse in question from the first day of March to the sixteenth day of October; that the quantity of water flowing through said race or watercourse is by said diversion reduced to such extent as to make it unprofitable for the parties owning the land there along to be at the expense of keeping it in repair, and as to utterly ruin and deprive the plaintiff of his right and power to irrigate his land.
    2d. “ To show further the number of acres of irrigable land the plaintiff owned at the time of the diversion, and the number of acres owned by him generally along this race, and the amount of damages accruing to him from said diversion and decrease of quantity of water, and the difference between the value of the farm immediately prior and immediately subsequent to such diversion, and that said farm was depreciated in value.”
    Defendant objected that, “ The plaintiff has already shown that the creek or stream appropriated by the city does not flow through his land, but that at a point more than a mile above his farm and four or five miles below the point of diversion by the city, water is diverted from the Antietam creek during certain portions of the year into an artificial channel, and that he has, by deed, the right to use water from this channel during certain hours in each week. The Act of Assembly under which this proceeding is had does not authorize the assessment of damages for any such right of irrigation, and the evidence is therefore irrelevant and inadmissible.”
    Objection overruled, and evidence admitted.
    3d. “ To show by Daniel S. Zacharias, the witness upon the stand, that the water of the stream which he has testified the city of Reading diverted and brought into the city in July 1874, before that time flowed through the race mentioned in the deeds already in evidence, and that the said race runs through the lands of the plaintiff described in the petition; proposing to follow this with proof of the fact that plaintiff had been using said water for the purposes of irrigation, watering cattle and domestic purposes, and by proof of damages.”
    Defendant objected:
    1. “ Because the race spoken of is an artificial channel, and not the natural channel of the stream. The right of the plaintiff, if any exists, is an easement. The act under which the damages are claimed does not allow damages for injury to an easement such as this.
    2. “ The creek diverted by defendant was only a branch of the Antietam creek, which was taken at a point four or five miles from the head of the race; the testimony is therefore uncertain and speculative.
    3. “ The petition only claims damages for loss of water for irrigation. No loss of water for that purpose has been shown.”
    Objections overruled, and evidence admitted.
    The following points were submitted by defendant, to which the •answers of the court, Sassaman, A. L. J,, are appended:
    1. That the Act of Assembly under which these proceedings are •had does not authorize the assessment of damages for the injury complained of by plaintiff, and therefore the verdict must be for •defendant.
    Ans. “ Negatived.”
    2. If the jury believe that there remained after the city took the Ohlinger water, sufficient water in the Antietam creek to irrigate the plaintiff’s meadows, then the plaintiff has not sustained, any substantial injury, the doctrine damnum absque injuria applies, and the plaintiff cannot recover.
    Ans. “If the jury believe, that although the petitioner in this case is deprived of some of the water he had a right to, and of a right he should have had and enjoyed, and yet, that the amount so taken from his use for the purposes of his grant was not appreciable, or slightly appreciable only, then this case falls under the doctrine of damnum absque injuria, and in that event, there can be no recovery here now. But if the loss of water to which he is entitled would be appreciable, and material to the enjoyment of his right, the jury may assess damages which would be commensurate with the actual depreciation of his farm, the direct and immediate result of the deprivation of water by the diversion of the stream, and only for that.”
    The verdict was for Althouse for $2150, when the city took this writ, and alleged that the court erred in admitting the plaintiff’s offers, and in the answer to the defendant’s first‘point.

      C. H. Buhl and Greorge F. Baer, for plaintiff in error.
    The plaintiff below did not claim compensation for injury done to him as a riparian proprietor, but for diminishing the flow of water in an artificial irrigating ‘ditch, constructed from his land over the lands of other persons to the stream, and from which ditch he could use water a certain number of hours in the week during half the year, to irrigate his meadows. This right is set forth in his deed, and is not that of a riparian proprietor, but constitutes a mere easement : Northam v. Hurley, 1 E. & B. 670.
    The Act of April 14th 1853, gives compensation to riparian owners, and the right of the latter is limited to natural streams, and does not attach in the case of artificial cuts or drains : Sampson v. Hoddinott, 1 C. B. N. S. 590.
    A corporation invested with the power of eminent domain, is liable to consequential damages to private property no further than it is declared to be so in the act of its incorporation: Canal Co. v. Mulliner, 18 P. F. Smith 360; Navigation Co. v. Coons, 6 W. & S. 101.
    The constitutional limitation applies only to an actual taking of property, and the word taking, is to be construed in its natural significance. Matters of annoyance, indirect and consequential injuries to property, and acts tending to depreciate the value, but which do not amount to a real “taking” are outside of the constitutional provision: Watson v. Railroad Co., 1 Wright 479; Tinicum Fishing Co. v. Carter, 11 P. F. Smith 31. The damages to the plaintiff are entirely consequential. They are necessarily so, and similar damages have been so adjudged in Koch v. Williamsport Water Co., 15 P. F. Smith 288.
    The owner of land contemplated by the statute was the owner of the bed of the stream, and not the owner of a ditch leading from the stream. Damages could be multiplied indefinitely, if every riparian owner could grant the right to divert water from the stream on to his neighbor’s lands, and thereby give them the right to compensation for injury to such easement. Damages have been denied parties for injuries to similar rights, but more meritorious and permanent: N. Y. & E. Railroad Co. v. Young, 9 Casey 175; Arnold v. Hudson Railroad Co., 49 Barb. 121.

      Jacob S. Livingood and Cyrus G. Derr, for defendant in error.
    Where the owner of lands through which a stream of water flows divides the stream, making two streams of one, and grants lands abutting upon the new stream, the grantee of such lands becomes a riparian owner: Nuttall v. Bracewell, 2 Exch. Law Rep. 12 ; Sutcliff v. Booth, 32 L. J. Q. B. 136; Stockport Waterworks Co. v. Potter, 7 H. & N. 160. When the city appropriated the stream, it was a talcing of Althouse’s property. The damages, therefore, are not consequential but direct: Hough v. Doylestown, 4 Brew. 333; Hecksher v. Shenandoah, 2 Leg. Chron. 273; Gardner v. Village of Hewburg, 2 Johns. Ch. 162. The stream flowed through Althouse’s land, and whether through an artificial or natural channel, makes no difference: Seibert v. Levan, 8 Barr 390.
    Whether the damages claimed by Althouse are consequential or direct; the city of Reading is bound under sect. 8 of art. 16 of the Constitution of 1874, to compensate him for them. The Constitution of 1838, provided compensation only for the talcing of property. The New Constitution provides compensation for the taking, injury or destruction of property.
   Mr. Justice Gordon

delivered the opinion of the court, March 22d 1880.

Were it necessary we would have no hesitation in holding that the provisions of sect. 8, art. 16, of the New Constitution, governs this case. That section provides for the making of compensation, not only for the talcing of private property for public use, as was the case theretofore, but also for its injury, or destruction. That the use, which the plaintiff made of the waters of the Great or Antietam creek, through the race or ditch in controversy, was property, though of an incorporeal kind, is not open to debate; and that it was injured by the operations of the city of Reading, is a fact established by the proper tribunal. There is, therefore, no good reason, apparent to us, why the case should not be covered by the above-recited eighth section of the Constitution.

Passing, however, this phase of the question, we cannot see why the plaintiff is not within the protection of the Act of April 14th 1858, Pamph. L. 416. This act provides, that Any damages sustained by the owners of land upon which such spring or springs, stream or streams of water, is or are situated, or through which it or ¿hey shall flow, by reason of tho permanent appropriation as aforesaid, .shall be ascertained and compensation made in manner hereinafter provided lor.”

Now, tho defendant has appropriated Ohlinger creek, one of the main branches of Antietam, from which the irrigating ditch or race in question receives its supply. The determinative question then is, did this stream of water, or what is the same, the water of this stream called Ohlinger, or any material part of it, before it was diverted by the city of Reading, flow through the plaintiff’s land ? The channel may be called what you please: Antietam creek or Lincoln’s ditch — that is of no consequence ; was the water formerly wont to flow through the Althouse property ? If so, ho had property in it; a right to it which is protected by the act. Tho counsel for the defendant scorns to think that the provisions of the act extend but to the owners of the natural bed and banks of the stream, but this is a construction warranted neither by the letter nor spirit of the statute. Who would doubt the application of the act were this ditch a natural branch, division of, or outflow of the main stream ? But what radical difference is made by the fact, that man dug the present channel instead of nature ? And how can this affect vested rights, rights now more than a century old ? In the submission executed by the two Lincolns and Michael Seyster, one hundred and eleven years ago, this ditch is spoken of as an existing race or watercourse; but who dug it, or how long it existed before that time, is not mentioned, and no one now knows. Its origin is literally buried in the shades of the past, hence, for all practical purposes it is a natural watercourse; prescriptively and, therefore, legally it is so. The right to it could be no better were it natural. As was said by Chief Justice Gibson, in Seibert v. Levan, 8 Barr 383, Whilst the grantor was lord of tho whole, he might assign a permanent channel to the stream, and as regards himself and those who claim under him, impress it with any character he should see proper. There is no particular sanctity in the natural bed of a stream, which is perpetually changing its course from accidental causes.” And in speaking of tho rule that water shall flow ubi aurrere solebat et consuevit, he says, it applies rather to the duty of returning it, than to the channel through which it flows. And so in Sutclife v. Booth, 32 L. J., Q. B. 136, it was held, per Wightman, J., that a watercourse, though artificial, may have been originally made under such circumstances, and have been so used as to give all the rights that the riparian proprietors would have had, had it been a natural stream.

Of like import is the case of Nuttall v. Branwell, Law Rep., 2 Exch. 1; in which Channell, B., says, “I see no reason.why the law applicable to ordinary running streams, should not be applicable to such a stream as this, for it is a natural flow or stream of water, though flowing in an artificial channel.” So, also, on a similar footing he puts the case where two adjoining riparian owners should, by agreement, so alter or divert a stream that it shall run in two channels instead of one. In such case he holds, that a grantor of land on the new stream would have all the rights of a riparian owner.

But the case here supposed is, in fact, the one in hand; here is a division of the Great creek, by the race or water-way in controversy, and that of a date so ancient that the memory of man runneth not to the contrary. So far as the case of the Stockport Waterworks Co., 7 H. & N. 160, has any application, it is an authority for the plaintiff, for Pollock, C. B., advocates the doctrine above stated.

We may then set it down for certain that, so far as authority goes, the ruling of the court below is sustained.

Many cases h^ve been cited upon part of the city, for the purpose of proving that an action for consequential damages against a corporation possessed of the right of eminent domain, cannot be sustained. But these authorities are now of no value, for the new constitution has introduced a different rule. Moreover, the Act of 1853 governs this case, and it, in express terms, provides for compensation to land-owners for any damage they may suffer, not for land taken, but for the taking, “permanent appropriation ” of water. The damages are thus necessarily consequential, as they arise from the disturbance or abridgment of an incorporeal right.

Judgment affirmed.