
    UNITED STATES LIFE INSURANCE Co. VS. GUARANTEE, TRUST AND SAFE DEPOSIT CO.
    Where an agent for an insurance company who is required to keep the premiums received by him as a fiduciary trust, opens an account as “manager” for the company, such account belongs to the company.
    If the agent deposits a worthless check and then remits to the insurance company, the latter is liable to make up the deficiency.
    Error to the Common Pleas, No. 4, of Phila. County. No. 52, Jan. Term, 1883.
    In 1880 J. M. Chapman was an agent of the U. S. Life Insurance Co., in Philadelphia, for the purpose of soliciting insurance. Pie kept a bank account with the Guarantee Trust Co. “as manager.” On Oct. 5th he deposited a check drawn by one, Dinkelspiel on Henry W. Baldwin of N. Y. for $887.50. The Trust Co. accepted it as cash, and the next day, he drew two checks to .the order of the U. S. Life Insurance Co., representing the amount due by him for premiums collected. They exhausted the whole balance credited to him. Subsequently, the Dinkelspiel check came back protested. This leaves an overdraft of $887.50. The Trust Co. seek to recover this from the Insurance Co. The case was tried before Samuel Dickson, Esq. as referee, under the Act of May 14,1874, P. L. 166, who, on Sept. 9, 1882,-found in favor of the plaintiffs for $978.49, his report being as follows:
    After being duly qualified to act as referee in this cause, as appears by agreement of reference and affidavit duly filed of record, I was attended by Charles S. Paneoast, Esq., for the plaintiffs, and E. Coppee Mitchell, Esq., and Alfred I. Phillips, Esq., for the defendants, at my office, No. 32 South.Third Street, Philadelphia, on October 24, 1881, and subsequent days, when and where all the testimony was taken, and the cause argued by counsel. The evidence is annexed hereto.
    The facts I find to be as follows :
    The United States Life Insurance Company is a corporation of the State of New York.
    In the conduct of its business in the Middle States, including the State of Pennsylvania, the company entered into an agreement, under date of January 29, 1877, with Henry W. Balwin, of the City of New York, as manager and superintendent of the Middle Department. (A copy of that agreement is hereto annexed as “Ehibit A.”) Special authority was also given to Baldwin to endorse for deposit in the Merchants’ Bank all checks drawn to the order of the company, and to draw out the same from time to time. (A copy of the letter of attorney is hereto annexed as “Exhibit B.”) Baldwin’s office and the Home Office were in different buildings, and no account was kept at the Home Office of the details of business transacted by sub-agents in the Middle Department. In settling his accounts with the company, he handed in the reports of sub-agents as vouchers.
    As contemplated by the agreement with Baldwin, the company entered into a further agreement with James M. Chapman, under date of January 25,1879, whereby he was appointed general agent in Eastern Pennsylvania, for the purpose of procuring insurance and securing applicants therefor. (It was stipulated in this agreement that he should'conduct his business and correspondence with the company, with Henry W. Baldwin, superintendent of the Middle Department of the company.) A copy of the agreement is hereto annexed as “Exhibit C,” and a copy of the certificate issued by the Insurance Commissioner of the State of Pennsylvania, in compliance with the provisions of the Act of 4th April, 1878, as “Exhibit D.”
    A bond of indemnity was given by Chapman to the company, in the sum of five thousand dollars ($5,000), with Christopher Chapman as surety, under date of 19th of April, 1879. A copy ol‘ the bond is hereto annexed as “Exhibit E.”
    No bank was designated by the president of the Insurance Company in which Chapman was to keep his account; but on August 20, 1879, Chapman opened an account with the Guarantee Trust Company, the plaintiff, and the following is a copy of the entry in the signature book, in which, at the time, he entered his name and place of business :
    
      Signature. By which Partner. Place of Business. Business.
    
    J. M. ChapmaD, H. S. Life Ins. Co. 504 Walnut St.
    Manager.
    At the address given, the Insurance Company had an office with the usual signs — the name of the company being painted on the window. The correspondence was conducted upon paper with the usual printed letter head, and the office was apparently the office of the company, and the business there transacted was ■conducted as the business of the company. Except in two or -three instances, all. the deposits made with the plaintiff, in this .account, were collections made for the company, and on the 1st .and 15th of every month, Chapman remitted a check to Baldwin in settlement of his semi-monthly account. (These checks were produced and are all drawn to the order of the company and ■endorsed in the name of the company by Baldwin for deposit).
    In October, 1880 Chapman did not remit on the first day of the month, and on the 6th, James H. Caniff, employed by Baldwin in his office as his deputy, came over to Philadelphia to :as certain the cause of delay. He was told by Chapman that he had already remitted on that day two checks in settlement of his account.
    It is testified to by Gr. H. Elsasser, who was a book-keeper in ’Chapman’s office, that he told Caniff that one of the checks sent by Chapman was not good, but this is denied by Caniff, and it d.oes not seem necessary to decide between them. Caniff returned to New York that night, having telegraphed Baldwin to meet him at seven (7) o’clock' the next morning. They did meet at the appointed time, at Baldwin’s office; and upon the opening ■of the mail they found that the two checks had been sent by ■Chapman, whereupon a telegram Avas sent to the Guarantee 'Trust Company, of which a copy is annexed as “Exhibit E,”' and another to Elsasser of which a copy is hereto annexed as “Exhibit •G.” Both were promptly delivered, and Elsasser took the one addressed to him, to Mr. Brown, treasurer of the Trust Company.
    Caniff reached the city about noon and presented the cheeks .and asked Avhether they were good, and if so, that they might be certified ; one of them did not haAe the Avord “manager” .added to the signature, and the treasurer of the Trust Company ■declined make any answer until it Avas corrected.’ Caniff took the check to Chapman and had the addition made, and returned to the Trust Company. He was then told by Mr. BrOAvn that it would require a deposit of sixty dollars ($60) to make the two checks good. lie obtained this money from Elsasser ; made the deposit, and then received from the Trust Company two checks, upon the Bank of the Republic. (Copies of the four checks, marked.“Exhibits TI, I, J, and IT,” áre hereto annexed.) *'
    It will be observed that the checks drawn by Chapman read :. “Pay to the United States Life Insurance Company or order,” and are endorsed: “United States Life Insurance Company, J. H. Caniff, Deputy Superintendent Middle Department,” and that the checks given in payment were also made payable to the-order of the United States Life Insurance Company, and are-endorsed for deposit: “Middle Department, United States Life Insurance Company, J. IT. Caniff, Deputy Superintendent.”
    Upon receiving these checks Caniff, returned with them to-New York, and they were deposited by him to Baldwin’s credit in the Merchants’ Bank for collection, and paid by the Bank of the Republic on the 9th of October.
    In making the endorsement and deposit, Caniff was acting under the power of attorney (“Exhibit B”), and these checks-only went through Baldwin’s bank, without the officers of the compauy knowing anything of the circumstances, the bank account of the company being kept in another bank.
    Upon the 5th of October Chapman had deposited a check off S. L. DinkelspioTfor eight hundred and eighty-seven dollars and fifty cents ($887.50,) which was made payable to his individual order and endorsed by him individually, and also as manager,, and which was credited to his account as cash, and deposited in the Bank of the Republic for collection, and forwarded by that bank to its correspondent in New York, the Fourth National Bank, and payment having been refused the next day upon presentation, the check was duly protested, and the protest having been mailed from New York on the 7th, was received by the-Bank of the Republic on the 8th, and-on the same day notice of the protest was given to the Trust Company, and to the office of the Insurance Company, at 504 Walnut Street.
    According to the usage in the City of New York, the notice of this protest was sent and received in time to charge the endorsers. (A copy of the check and protest is hereto annexed as Exhibit “L.”)
    
      Dinkelspiel was an agent of the company in Baldwin’s office, "having a written contract with the company, but no connection with the Home Office, and his correct designation is said to be . •“a solicitor of insurance.” He used printed cheeks drawn on Baldwin, and the one deposited by Chapman is No. 1260, but it as testified to by. Caniff that Dinkelspiel kept no deposit with Baldwin, and was in the habit of getting the bank notes and ■leaving them with one of the boys in the office,, to pay his -checks on presentation. This practice had continued for months, if not years, and upon. Caniff’s attention being called to the -number of the check, he testified: “I heard him say a good .many times, when he commenced his banking, he did that so they would think he had a big bank account. I think he commenced at 1200. It was a shining account. He would go to a horse-race and lose $400 or $500, and give checks like this to ‘ 1 hose horse-men, without having the money, so that he would 'have to get the money in order to make his check good again.” This check was given to Chapman as an exchange cheek, .and Chapman’s own check was never presented or paid.
    There is some conflict of testimony as to what was said by Elsasser to Caniff, in reference to the Dinkelspiel check, and as to the time of the conversation. At page 78, Caniff testifies: •“The only thing that was ever said on that day about -that, was this: ‘Mr. Dinkelspiel was stuck.’ I asked him,‘Why?’ •'Well,’ he said, ‘Mr. Chapman had Mr. DhiLelspiel’s check and .it had not been paid.’ Those are the very words he said to me.” He was not able to fix the time of this conversation when first ■examined, but subsequently he testified that it was at the ' time he obtained the sixty dollars ($60) from Elsasser, which must have been on the 7.th, and before he received payment.
    He also said (page 90) that he did not know whether he had •said anything about the Dinkelspiel check to Baldwin on the morning, of the 7th.
    It appears, however, that the check drawn by Dinkelspiel on Baldwin, which had been deposited by Chapman and accepted as cash, had been presented to Baldwin and protested on the *6th of October, the day before the demand was made upon the 'Trust Company to hold the deposit as the property of the Insuranee Company, and that Caniff knew before getting payment that a check of Dinkelspiel’s had been deposited by Chapman to-make his account good. It is true that he says Elsasser told, him the check had been paid, and that it was Dinkelspiel who-would be “stuckbut he. did not come over to Philadelphia until the afternoon of the 6th day of the protest, and he met Baldwin, the drawee of the check, at his office on the morning: of the 7th.
    Such being the facts, the Trust Company seek to recover the-amount of the overdraft from the Insurance Company, upon the ground that the account was the company’s account, and that Caniff, Baldwin and Chapman in making the deposit and receiving the payment were acting within the scope of their authority as-agents ; and that if the account was that of the-corporation, then the plaintiff could recover the money, as paid under mistake of fact, or hold ■ the Insurance Company as-endorser on the Dinkelspiel check; and it is further urged that whether the real depositor or not, as between itself and its; agents, the payment was demanded and received in that character, and the acceptance of the checks, drawn to its order,, amounts to a ratification of the representation made by Baldwin and Cani'ff. On the part of the defendant it is contended: that the Trust Company dealt with Chapman as an individual, and gave him credit as such,-and suffered the loss from him in that capacity, and not as the agent of the defendants. It is further-urged that Baldwin was an agent of the company, and not an officer, and was personally liable for collections remitted to him by sub-agents and that his bank account was entirely distinct and independent from the bank account of the company, and that Chapman was a sub-agent nominated by and working under-Baldwin, and that his bank account was his individual bank account, against which the company could assert no claim, and that at all events the Dinkelspiel check had been received by Chapman in a private transaction, and did not represent collections made, and to the extent of that check therefore the account must be treated as an individual one.
    So that when Chapman drew the two checks for the amount actually due, according to his report, for premiums collected* and the company received them and accepted payment they became holders for value; and that there was nothing in the contracts with Chapman or Baldwin, or in the general authority given them, to authorize the sending of the telegram of the 7th October, and that the plaintiff in making payment' to Caniff relied solely upon Chapman’s checks, and did not treat or regard the company as the owner of the deposit, and the money cannot now be recovered back, as the situation of the . defendants has been prejudiced by the discharge of the surety.
    In the discussion of this question reference was made to Bank vs. King, 7 P F. Smith 202, and similar cases, and it would seem‘to be clear, that the company could follow and reclaim collections made on its behalf so long as their identity could be established. This is substantially the same as the common law right of recaption, only a Court of equity goes further, and will not permit a confusion or mixture of moneys to defeat the right of the owner. The rule is well illustrated in Voight vs. Lewis, 11th Philadelphia 511; Knatchbull’s Appeal, Hallett’s Estate L. R. 13 Ch. Div. 696.
    But the recovery in. these cases does not depend upon the character of the account, but upon the title to the peculiar deposit, and if that is made out it will prevail, even as against the creditors of the agent after a deposit to his own credit, in his own private account.
    In the present controversy, too, there was no fund on deposit and the erroneous credit was given on the faith of a check which was never the property of the Insurance Company, but was borrowed by Chapman from Dinkelspiel in exchange for his own.
    It is necessary, therefore, to consider whether the account was in fact the account of the Insurance Company, or if not, whether the Trust Company had the right to so regard it, for if Chapman’s account, then the Insurance Company would be entitled, under Stedman vs. Carstairs, 11 W. N. C. 102; and Watson vs. Russell, 3 B. & S., (113 E. C. L.) 34, to retain the money.
    It is contended on the part of the defendants that .as the company did not exercise its option to control the account of Chapman, but looked to his bond, it must be regarded as his individual account. Ilis contract, however, expressly stipulates that he should keep the moneys collected as a “fiduciary trust.” ' The article is as follows: “That all moneys or securities received for or on behalf of said company, shall, while' held by the said party of the second part, be held as a fiduciary trust, and that they are to be kept separate and distinct, and are not to be mixed or mingled with the funds or securities of said party of ihe second part, or any other funds or securities, and are not to be used by the said party of the second part for any personal use or purpose whatever, but to be held, reported upon, and transmitted to the company, in accordance with its instructions.”
    • In opening an account as “Manager of the United States Life Insurance Company,” Chapman was only doing what it was his contract duty to do and, if he did so without waiting to be prompted by'the president of the company, (who might naturally also leave the matter to the supervision of Mr. Baldwin), he was acting directly within the line of his duty, and in the discharge of his express undertaking.
    It was urged that the word “manager” was merely descriptive of the person, and not of the ownership of the deposit, but the account was opened in the name of J. W. Chapman, manager of the United States Life Insurance Company. Upon its special facts, Jackson vs. Bank, 10 Barr 61, was doubtless correctly decided; but as is shown in Paxon vs. Sanderson, 3 Philadelphia 303; and Bank vs. Jones, 6 Wright 536, an account opened in the name of a depositor as “agent,” is prima facie, the property-of his principal, and where the name of the principal has been added, as was done in this instance, no question as to its ownership can arise.
    If this account is to be regarded as that of the corporation, and the opening of it in that manner were in the scope of Chapman’s authority, it is unnecessary to consider whether the company had notice; but his remittances were made twice a month, in checks drawn to the order of the United States Life Insurance Company, and by the authority given under. “Exhibit B.” Baldwin endorsed the name of the company and deposited them to his credit. Whether the president knew the fact or not, his deputy (appointed for the special purpose of looking after these collections), knew it, and notice to him was notice to his 'principal.
    It is still further maintained, however, that to the extent of the Dinkelspiel check, it was the individual account of Chapman, and that as the payment ivas made against that, the defendant must be taken as having given credit to Chapman individually.
    If the evidence showed that the credit was given to Chapman, in permitting the overdraft, his principal would certainly not be liable. This was very recently decided by the Supreme Court of the United States, in the case of Bank vs. Insurance Company, 13 Otto 783. No such evidence exists in the present case, and the deposit was in the regular course of his business, in accordance with ordinary usages of banks and trust companies in the City of Philadelphia, and without any special contract between Chapman and the trust company.
    If this view of the nature and character of the account be the true one, we have the simple case of a depositor who has received credit to which he is not entitled, and must, therefore, restore the money which his bank has paid him by mistake; Mechanics Bank, vs. Earp., 4 R. 384.
    Should a different view be taken, and the account be regarded as actually that of Chapman, as between himself and his company, it would become necessary to consider whether the trust company had not the right to treat it as a company account. The telegráms of the 7th October alleged that the deposit, was the deposit of the company, and these telegrams were sent from the very office at which Dinkelspiel’s check, 'which was the basis of the so-called “deposit,” had been protested the day before. Canifi confirmed the message which Baldwin and himself sent, •and presented cheeks which corroborated his assertion as they were payable to the order of the corporation.
    If Mr. Brown had not been led to believe that he was making payment to a responsible principal, after having been put on his guard against the insolvent agent, it is more than probable that he would have scrutinized the account and ascertained whether he were safe in making payment.
    
      In giving credit for a check like that of Dinkelspiel’s the trust company relied, — at least other banks always do, — on the depositor, and not on the drawer, and distinct notice had been given that Chapman was no longer entitled to credit. The claim, too, was for the payment of the deposit as a substantial entity, though Caniffleanied on the 7th, if not before, that Chapman had borrowed Dinkelspiel’s check to make up his remittances, and if he had not been in the office the day before, when it was presented and payment refused, he could easily have learned that a check of Dinkelspiel’s, if not this check, had been protested.
    The agents of the company having claimed the deposits as belonging to the company, and having accepted payment in checks drawn to the order of the company, the corporation is bound by their acts, as it is clear that when agents assume to act, in the name of a principal on its behalf, aiid the benefit of the action is afterwards accepted, such acceptance is a confirmation which concludes the question of authority, and that as to those who deal with the agent, their assumed and apparent authority must be regarded as their actual authority. This familiar principle is well stated and illustrated in the recent case of Mackay vs. Bank, 5 L. R. P. C. 394. The syllabus is as follows :■ “A master is answerable for every such wrong of his servant or of his agent as is committed in the course of the service and for the master’s benefit, though no express command or privity of the master is proved; and there is no distinction between the case of fraud and the case of any other wrong.”
    “When one has suffered, and another has profited by the fraudulent representation of an agent of the latter made within the scope of his authority, the former is entitled to recover damages.”
    “An action of deceit may be maintained against a company, whether it is incorporated or not incorporated, in respect of the fraud of its agent.”
    An officer of a banking corporation, whoso duty it was to obtain the acceptance of bills of exchange in which the bank was interested, fraudulently, but without the knowledge, of the president or directors of the bank, made a representation to A, which, by omitting the material fact, misled him, and induced him to accept a bill in which the bank was interested ; and he was compelled to pay the bill.- Held, that he could recover from the bank the amount so paid.
    “In an action of deceit, whether against a person or against a company, the fraud of the agent may be treated for the purpose of pleading as that of the principal.”
    The private arrangements between the company and Chapman, and the company and Baldwin, are thus rendered immaterial, by the fact that the checks obtained from the trust company, were made payable to the order of the insurance company, and were endorsed in its nam'e, with its sanction, by its duly constituted agent.
    A claim is also asserted against the insurance company as endorser: If the account be treated as the account of the company, its responsibility on the endorsment would be clear.
    It was the duty of the agent to deposit collections, in order to-make remittances ; the credits so obtained were credits in favor of his principal, and the remittances were remittances to his principal. Such qualified authority is given without hesitation, to utterly irresponsible persons, as no liability can be created by which loss can be incurred, except under such very peculiar complications as here presented. It is an authority, too, involved and implied in the very act of opening a bank account, and if the endorsement of Chapman must be taken to be the endorsement of the company, as due notice of the protest was given, the insurance company must be held liable as endorser.
    If such a credit had been obtained for the purpose of making a payment to a third party, it is possible that a different view might be taken, but where the principal gets the advantage of the endorsement, there can be no doubt as to the liability.
    The final objection urged by the defendant, that the surety of Chapman has been discharged, must be altogether without foundation.
    Au agcut cannot claim the benefit of an alleged payment which he did not in tact make.
    
      Chapman’s obligation was to faithfully account. • lie had not so accounted. On the contrary, he has misappropriated the money he collected. If so, no fictitious or paper settlement, based on a mistake, can avail him or his surety, and the loss must ultimately fall on the one who should justly bear it.
    I therefore report to the Court that I find for the plaintiffs, and assess the damages at $978.49.
    The Insurance Company then took a writ of error, assigning various errors as follows: 1st. That the referee erred in finding the opening of the account by J. M. Chapman, “as manager,” was in the line of his duty. 2nd. That his opening this account made it the account of' the Insurance Company. 3rd. That in finding that the remittance of checks by Chapman to Baldwin, was notice to the company of the manner in which the account was kept. In not finding that Chapman had no authority to open an account, by which the company could be chai'ged with his private dealings. In not finding that the Trust Company were bound to prove that the defendants had express knowledge of the manner in which the account was kept, before they could rely upon the credit of defendants in dealing with Chapman. In not finding, that the account kept by Chapman was an individual account, to the extent of the Dinkelspiel cheek. In not finding that the Insurance Company were bona fide holders for value, of the checks remitted to them. In not finding, that the payment was made to the Insurance Company, upon faith of Chapman’s checks, without regard to any claims that they were owners of the deposit. In finding, that the Insurance Company are bound by the acts done by Baldwin, in claiming that Chapman’s account belonged to the company. In finding, that there is any responsibility ou the part of the Insurance Company, by reason of Chapman’s endorsements as manager. In not finding, that the endorsers of the check of Dinkelspiel were discharged by the delay in sending notice of protest. In hot finding that the Trust Company is estopped by its failure to stop payment of their checks given in payment of Chapman’s checks. In finding that the surety upon Chapman’s bond was not discharged, upon the-payment of Chapman’s check by the Trust Company.
    
      E. Coppee Mitchell, Esq., for plaintiffs
    argued, the addition of the word “manager” to the account, without further designation, was not notice to the Insurance Company; Custer vs. Bank, 9 Penna. 27. An insurance agent is only a debtor to his company for premiums collected. They cannot recover his specific deposit; Life Association vs. Catlin, Ante 338; Jackson vs. Bank, 10 Penna. 62. The addition of such words as “president,” “committee,” &c., are only descriptive of the person ; Tassey vs. Church, 4 W. & S. 346; Pentz vs. Stanton, 10 Wendel, 271; Dewitt vs. Walton, 5 Selden 571; Barker vs. Insurance Company, 3 Wendel 94; Miller vs. Bank, 1 Paige 444; Ulam vs. Boyd, 87 Penna. 477. The Insurance Company was not responsible for Chapman’s account; Bank vs. Kearsley, L. R., 6 C. P. 434 ; Farhall vs. Farhall, L. R. 7 Ch. 123.
    The case of Bank vs. Insurance Company, 13 Otto 783, was like the present one, but it was held, that the bank could not recover. This matter was only an overdrawing of the account of Chapman, the customer of the bank, for which he only is responsible; Morse on Banking, 378; Oddie vs. Bank, 45 N. Y. 735. The Insurance Company were holders for value of Chapman’s checks. Bad faith is not to be presumed, but must be expressly shown; Battles vs. Laudenslager, 84 Penna. 446; Bear’s Estate, 60 Penna. 430; Damon vs. Bache, 55 Penna. 67; Stedman vs. Carstairs, 11 W. N. C. 102. The referee finds, that the notice was not deemed necessary to charge endorsers of the custom of N. Y. This custom is improper; Stevenson vs. Dickson, 24 Penna. 148. The Trust Company could have stopped payment of their cheeks on the Bank of the Republic; Dougherty vs. Bank, 93 Penna. 227.
    
      Charles S. Pancoast, Esq. for defendants
    argued, that the account kept with the Guarantee Trust Company was the account of the Insurance Company. It was opened under the following entry in the Secondary book, made by Chapman: “J. M. Chapman, Manager, U. S. Life Ins. Co., 504 Walnut St.” The Insurance Company had a right to the deposits so made National Bank vs. Insurance Company, 14 Otto 54. He also cited Mechanics’ Bank vs. Earp, 4 Rawle 384; Ewell’s Evans on Agency, 85, as to the ratification.
    The Supreme Court affirmed the judgment on February 5th, 1883, in the following opinion:
   Per Curiam.

This judgment is affirmed on the plain and satisfactory opinion of the referee.  