
    The State Bank of Pike, Respondent, v. George M. Brown and Staley N. Wood, Appellants.
    
      Surety on a bank cashier’s bond—what proof in regard to the entries therein makes the bank books, in which the cashier has made false entries, competent in determining his indebtedness to the bank.
    
    In an action brought against the sureties upon a bond given by a bank cashier, conditioned for the faithful performance of his duties, to recover moneys alleged to have been embezzled by the cashier, there was no evidence tending to show that the cashier had embezzled any particular sum belonging to the bank, and the embezzlement was sought to be proved by an examination of the books of the bank, which had been manipulated by the cashier, who was a fugitive from justice. Many of the entries in the books of the bank, including all of the false entries, were made by the cashier personally, but many other entries therein contained were made by other employees of the bank.
    The bank proved by each of the employees, other than the defaulting ^ashier and an employee who had died, that the entries made by them -respectively were correct. As to the entries made by the deceased employee, it was shown that they were made in the regular course of business, and many of them were shown to be correct. It was also proved that settlements had been made from the books and that they had been found to be correct.
    
      Meld, that the books as a whole were properly received in evidence against the sureties upon the bond, for the purpose of determining the amount of the cashier’s indebtedness.
    Appeal by the defendants, George M. Brown and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the, county of Wyoming on the 9th day of June, 1903, upon the report of a referee.
    The action was commenced on the 22d day of April, 1897, to recover the amount alleged to have been embezzled from the plaintiff by one Earle S. White, while in its employ as cashier, and which it is claimed was secured to it by a bond executed by said White as principal and by the defendants and two others as sureties, and upon which this suit is brought.
    The action was first tried in June, 1897, before a referee duly appointed for that purpose, who reported in favor of the plaintiff substantially for the amount demanded in the complaint, and judgment was entered accordingly. The defendants appealed to the Appellate Division, fourth department, where such judgment was in all things affirmed. (29 App. Div. 627.) From such judgment of affirmance the defendants appealed to the Court of Appeals, where the same was reversed and a new trial ordered, with costs to appellants to abide event. (165 N. Y. 216.) Thereupon such new trial was had and resulted in the judgment from which this appeal is taken.
    
      C. S. Cary, for the appellants.
    
      G. S. Van Gorder, for the respondent.
   McLennan, P. J. :

The plaintiff is a banking corporation, organized on the 12th day of April, 1890, pursuant to the laws of this State, and on said date it took over the entire assets and business of the private banking firm of Adams, Weed & Co., and since that time said plaintiff has been conducting a regular banking business in the village of Pike, Wyoming county, N. Y.

One Earle S. White had been the cashier of Adams, Weed & Co., and upon the organization of the plaintiff was employed in the same position with it, and so continued until August 15, 1895, during which time he had principal charge, custody and control of plaintiff’s business, books of account and-assets.

From said 12th day of April, 1890, until January 2, 1893, the plaintiff had no security for the faithful discharge of the duties of , White as cashier, but on said last-mentioned date the bond following was executed by White as principal and by the defendants and two others as sureties, viz.:

“ Whereas, the above bounden Earle S. White has been elected cashier of The State Bank of Pike, located and doing business in the village of Pike, N. Y., by reason whereof divers sums of money, goods and chattels, the property of said bank, will come into his hands.
Now, therefore, the condition of the above obligation is such that if the said Earle S. White, his executors or administrators or assigns, at the expiration of his term of office upon request to him or them made, shall make or give unto the said State Bank of Pike, or its agents or attorney, a just and true account of all such sums of money, goods or chattels, and other valuable things as have come into his hands, charge or possession, as Cashier of the said Bank, and shall pay over and deliver to his successor in office, or such other person as may be duly authorized to receive the same, all such sums of money, goods and chattels, and other valuable things as shall appear to be in his hands and due by him to the said batik, then the above obligation to be void, else to remain in full force and. virtue.
-“ Sealed with our seals. . Dated this second day of January, 1893 (one thousand eight hundred and ninety-three).
“ (Signed) EARLE S. WHITE.
“HENRY K. WHITE.
“ W. O. LELAND.
“S. N. WOOD.
“ GEORGE M. BROWN.”

'On August 15, 1895, White ceased to be cashier for the plaintiff and left the village of Pike, where he had resided during all the times in question. He remained away about three months, and upon ' his return the plaintiff, having in the meantime discovered evidence of his alleged defalcation and embezzlement, demanded from him that he account with it, as cashier, and straighten his matters with it, which he refused to do and has never since done.

The plaintiff claims, as appears by its complaint and bill of particulars, that while White was its cashier and after the bond above set forth was executed, he embezzled and misappropriated its moneys, and, therefore, became indebted to it as follows;

Bills Discounted Account........................... $223 04

In Sundry Ledger Account......................... 361 08

Certificates of Deposit Account..................... 1,283 00

Total..................................... $1,867 12

Two questions are presented by this appeal: First, does the evidence fairly tend to establish as against the defendants that White, their principal, embezzled and misappropriated the funds and property of the plaintiff ? And, second, if so, are the defendants legally liable upon their bond for the amount so embezzled and misappropriated ?

As to the first question. Concededly there is no evidence tending to show that while White was cashier he took any particular sum belonging to the- plaintiff and appropriated the same to his own use. In the nature of things it would be impossible to prove such a transaction. Common experience demonstrates that- the. bank cashier.who embezzles or defaults does not pursue, that course which would lead to sure and immediate detection, but. instead he manipulates the entries upon the books in such manner that his embezzlement or defalcation can only be discovered, if at all, by a detailed and exhaustive examination-of the books. As pointed out in the opinion of the learned referee, an examination of plaintiff’s books which were- introduced in evidence very conclusively shows that White embezzled of funds belonging to it an amount even in excess of that for which judgment was ¡awarded. As to “ Bills Discounted,” it appears by the evidence of Hr. George H. Chase, an expert bank accountant, that he made a thorough examination of plaintiff’s" books covering the period from January 2, 1893, when the bond in question Was executed, to August 15, 1895, when White ceased to be plaintiff’s cashier. The witness testified that on said last-mentioned date, as appears by the books of the bank and by the'daily statement'register, which was in the handwriting of White, plaintiff had discounted and should have had on hand bills and notes amounting to the sum of $91,071.29, whereas in fact it only had of such paper $90,848.25, and that by reason thereof the plaintiff sustained loss to the amount of $223.04. The witness also points out several false entries in said account, all of Which are in the handwriting of White. For instance, under date of February 25, 1895, there is entered on .the journal in White’s handwriting a charge of bills discounted debtor balance'of $75,72, but there is no corresponding entry in the discount register. In each instance where a discrepancy exists in such account the false entry is made by White. The testimony, however, does not show the precise item or items Which made up the total - deficiency in the amount. That was only arrived at by an examination of both sides of the entire account'. Again,, as to “ Certificates of Deposit Account,” the. witness testifies that, as appears, by said account, the plaintiff through its cashier, White, between the 27th day of September, 1893, and February 1, 1895, both inclusive, issued four certificates of deposit' aggregating $1,173, and that White.twice charged the plaintiff with the payment of all of those certificates. To illustrate: Under date of March 12, 1894, certificate No. 2158 for $100 is charged as having been paid on that date, in White’s handwriting.; Under date of December 23, 1894, the same certificate is again charged as having been paid, and also in White’s handwriting. The same is true as to each of the other three certificates. Between the dates mentioned White made false footings and entries in said account to such amount that the total amount of such account of which the plaintiff was defrauded by White was $1,288, no part of which White has accounted for or paid over to it. It appears that substantially all the false entries pertaining in any manner to this account were in White’s handwriting. .

With reference to the “ Sundry Ledger. Account,” which was principally kept by White, it appears, as shown by such account, that on August 14, 1895, the plaintiff owed sundry depositors $12,359.80. White stated the amount of such indebtedness in his own handwriting to be $11,998.72, showing a discrepancy of $361.89, which amount the plaintiff has been compelled to pay to the parties entitled thereto. With reference to this account it is true that the specific items which make up the deficiency are not proved, but White made the false entry in the daily statement register, and, as said by the learned referee, “ evidently for the purpose of concealing this deficiency and forcing a balance.”

The deficiencies in these three accounts, with interest thereon, make up the amount of damages for which judgment was rendered against the defendants under their alleged obligation upon the bond in question.

It is urged by the able counsel for appellant that even although the books of the bank would have been competent to establish its claim against White, they were not competent to establish a liability against the defendants under the bond in suit. It is fair to say that although many of the entries contained in the books were made by White personally, and that all of the entries which the evidence indicates were false were made by him, many entries contained in said books were made by employees of the plaintiff other than White, and that the entries or books as a whole were considered by the witnesses in reaching the balances which they did and in determining the amount of White’s defalcation. It, therefore, becomes important to determine whether or not the books as a whole were properly received in evidence. Upon the former trial the books were thus received, simply upon the proof having been made that they were the books of the bank, kept in the ordinary way and in the regular course of business. This was held to be error by the Court of Appeals. (State Bank of Pike v. Brown, 165 N. Y.. 216.)

Upon this trial the plaintiff proved that all the entries made in its books between January 2, 1893, the date of the bond, and August. 15, 1895, when White ceased to he its cashier, were made either by White, its cashier, Mr, Van Gorder, its president, Miss Franc Banfield, the bookkeeper, Mr. Clayton A. Metcalf, its teller, or Miss Mainwaring, an assistant bookkeeper. Each of such employees gave evidence to .the effect that the entries made by them in the books respectively were correct, except White, who was a fugitive from justice and without the jurisdiction of the court, and Miss Banfield, who was dead at the time of the trial, but all of the entries made by her were shown to have been' made in the regular course of business, and many of them were shown to be correct, and in addition it was proven that settlements had been made from the books and that they had been found to be correct.

As we interpret the opinion of the Court of Appeals upon the decision of this case, such, proof having been made the books were competent evidence as against the defendants. Upon principle, we think, it ought to be so held, else the giving of a bond by a bank cashier for the purpose of protecting the bank against his embezzlement or defalcation is an idle ceremony.

The' learned referee, in the opinion written by him, has recited : with considerable detail the evidence which supports the conclusion that White embezzled and misappropriated the funds of the plaintiff to an amount at least equal to the sum awarded the plaintiff as damages by the judgment appealed from, and with such conclusion we are entirely satisfied. The referee also calls, attention to and cites the authorities which, in our judgment, establish that the plaintiff’s books under the proofs in this case were competent eyidence for the purpose of establishing the embezzlement or defalcation of White as against the defendants, and also to the authorities which hold that, under the circumstances disclosed by the evidence, the defendants are liable to the plaintiff for the amount of such defalcation or embezzlement, and we, therefore, deem it unnecessary to further advert to the testimony or to such authorities.

Besides, all the questions now presented were before the Court of Appeals when the former appeal was considered by that court, and we think it should be assumed that if the learned court were of the opinion that upon the merits the plaintiff could not succeed it would have so indicated and not have reversed the judgment solely upon the ground of error in the admission of evidence. At all events, we are of the opinion that the error pointed out by'the Court of Appeals as. having been committed upon the former trial has been fully obviated upon this trial, and that the record of the trial now presented is free from error prejudicial to the defendants, and that upon the merits the plaintiff is entitled to recover, and, therefore, that the judgment appealed from should be affirmed, with costs.

All concurred.

Judgment affirmed, with costs. 
      
       The following is the opinion of the referee in this case:
      George Wadsworth, Referee:
      The plaintiff is a banting corporation organized under the laws of the State; of New York on the 12th day of April, 1892.
      On that day it succeeded to and' took over the assets and business of the private banking firm of Adams, Weed & Co.
      Earle S. White had been the cashier of Adams, Weed & Co., and became the cashier of the plaintiff and was such cashier from April 12, 1892, to August 15, 18.95, and had principal charge, custody and control of the plaintiff’s business, books of account and assets.
      From April 12, 1892, to January 2, 1893, said plaintiff had no security for White’s faithful performance of his duty. .
      
        On the said 2d day of January, 1893, said White as principal, together with these defendants, and certain other persons as sureties, made, executed and delivered to the plaintiff their certain bond, dated on that day, in the penal sum of §20,000, which bond is set forth in full in the complaint herein, and recites that White has been elected cashier of the plaintiff, by reason whereof divers sums of money, goods and chattels, the property of said bank, will come into his hands, and the condition thereof is that if the said Earle 8. White, at the expiration of his term of office, upon request to him made, shall make or give unto the said State Bank of Pike, or its agent or attorney, a just and true account of all such sums of money, goods or chattels and other valuable things as have come into his hands, charge or possession, as cashier of the said bank, and shall pay over and deliver to his successor in office, or such other person as may be duly authorized to receive the same, all such sums of money, goods and chattels and other valuable things, as shall appear to be in his hands and due by him to the said bank, then the obligation to be void, else to remain in full force and virtue.
      On August 16, 1895, White ceased to be cashier, and left the village of Pike, where the plaintiff, was located, and was absent therefrom for about three or four months; the precise length of such absence is immaterial; upon his return the plaintiff demanded from him that he account with it as such cashier and straighten up his matters with it, which he refused to do and never has done.
      The plaintiff alleges that while White was its cashier-he embezzled and misappropriated some of its moneys and has not accounted for or paid over the same, and it brings this action on the bond above mentioned to recover the amount of such alleged defalcations from these defendants, who are two of the sureties who executed said bond.
      In its bill of particulars the plaintiff sets forth that White failed to account for or pay over and was short in
      Bills discounted account ......................................... §223 04
      In sundry ledger account....................................... 361 08
      And in certificates of deposit account......................:...... 1,283 00
      $1,867 12
      and that he embezzled these sums while he was cashier and after the execution and delivery of said bond, to wit, January 2, 1893. The bond reads:
      “ Know All Men By These Presents, That I, Earle S. White, * * * Henry K. White, * * * W. O. Leland, * * * S. N. Wood and George M. Brown, * * * am held and firmly bound unto The State Bank of Pike, N. Y., in the sum of twenty thousand dollars * * * for which payment I hind myself, my heirs, executors and administrators; ” and defendants plead,' among other things, that this is a joint bond and that William O. Leland should be joined with them as defendants, Henry K. White being dead.
      The rule govering such obligations is stated as follows:
      If the words are “I promise to pay,” and there are many promisors, it is the several promise of each and the jloint promise of all. (1 Pars; Notes & Bills, 351; and see 1 Daniel Neg. Inst. [5th ed.] 119, § 94; Van Alstyne v. Van Slyck, 10 Barb; 383; Partridge v. Colby, 19 id. 248; Ely v. Clute, 19 Hun, 35.)
      The bond in question then was the several bond of each and the joint bond of all, i. e., a joint and several obligation, and the plaintiff can maintain an action thereon against all the makers jointly or against one or more of them severally.
      ; The language of the condition of. the bond is peculiar; it does not follow the ordinary terms of a bond given as security for the faithful performance of duty,: etc., but after .the recital that by reason of White’s cashiership;'divers sums Of money, goods and chattels, the property of the bank, will come into his hands, it provides that if at the expiration of his term of office, upon request to him made, he shall render a júst and true account, etc., and pay over and deliver, etc., all such sums of money, etc., as shall appear to be in his hands and due by him to the said bank, then the: obligation to: be void, etc.
      The demand or request was made, but he did not render the account or pay over or deliver any money or other thing to the bank, and the question is whether these defendants as sureties are liable for his default.
      The- bond has been construed by the Court of Appeals,' which- holds that “ the burden of proof was upon the plaintiff to show that the condition of the bond was broken by the failure of White *at the expiration of his term of-office,' and ‘ upon request to him made,’ either to render the" just and true account required or to pay over and deliver the moneys and other valuable things which had come into his possession as cashier. * * * The defendants were not .responsible for the way in which he discharged'his general duties as cashier, but only for his failure to render a just account of what came into, his hands in that capacity, and to pay over -and deliver accordingly.” (State Bank of Pike v. Brown, 165 N. Y. 216, 218, 230.)
      The plaintiff has', performed these requirements...
      The former judgment in this action in favor of the plaintiff was reversed because, without any preliminary proof, the plaintiff’s books -of account were admitted in-solido as evidence per se against the sureties, and were not competent evidence of, themselves, and could be lawfully received against the defendants to-the extent.only that they were admissible against strangers generally, according to the principles of the common law governing the subject; neither the books nor the computations made therefrom were admissible against the defendants because the necessary conditions precedent were not complied with by the plaintiff. (Id. 220, 221.)
      But the court says further (p. 220), the “ entries made by White, after the bond was given, were admissible against his sureties,” and again (on p. 222), “ we do not hold that the pertinent entries in the books were not admissible under any circumstances, but simply that they were not admissible when offered, and were not made admissible by any evidence subsequently received.”
      If the necessary conditions precedent had been complied with, "the books, or such entries therein as are pertinent to the inquiry, would have been competent and admissible in evidence.
      Upon this second trial the necessary facts to make the books competent were sufficiently proven; all the persons who made entries therein, except White and a Miss Banfield, were sworn and examined; the entries made by White were proven to be in his handwriting, and it was shown that Miss Banfield died before the trial, etc.; by this testimony the books were made competent. (Ocean Nat. Bank of N. Y. City v. Carll, 55 N. Y. 440; White v. Ambler, 8 id. 170; Bank of Monroe v. Culver, 2 Hill, 531; Brewster v. Doane, Id. 537; Merrill v. I. & O. R. R. Co., 16 Wend. 586, 594, 595.)
      And they were admitted in evidence so far as they are pertinent to the issues, and so far only.
      The plaintiff claims that by the books and other testimony it has established that White was a defaulter in the various sums and items specified in its bill of particulars.
      This claim seems to be well founded.
      The shortage in the certificate of deposit account is fully established by the conceded false entries made in that account by White himself.
      The bank had issued:
      Certificate of deposit No. 1997, September 27, 1893................... $553 00
      Certificate of deposit No. 2158, December 26, 1893................. 100 00
      Certificate of deposit No. 2299, March 17, 1894..:................... 500 00
      Certificate of deposit No. 2884, February Í, 1895 ..................... 20 00
      $1,173 00
      White twice charged the plaintiff with the payment of all these certificates, $1,173.
      These double charges were all made after January 3, 1893.
      On May 17, 1894, White made a false footing and entry in this account, to the •damage of plaintiff $100, and on May 24, 1895, he made another false footing and entry in the same account to the amount of $10, making a total deficit in the certificate of deposit account of §1,283, which White did not account for or pay over to the plaintiff, and for which these defendants are liable in this action.
      .The evidence further shows that there is a shortage and deficit in the bills discounted account of §223.04 for which said White did not account, or pay or deliver to plaintiff.
      While the testimony does not show the precise item or items which constitute this deficiency, it does show that White made many false entries in this account, to the damage of the plaintiff in an amount larger than the deficiency claimed, and that he never accounted for or paid over this sum of $323.04.
      I, therefore, hold that the defendants are liable for this amount.
      On August 14, 1895, said plaintiff owed sundry depositors as shown by its sundry ledger account §12,359.80. Said Earle S. White stated the amount of said indebtedness in his own handwriting in the daily statement register as being §11,998.72, showing a discrepancy of §361.08 between the actual amount due sundry depositors and White’s entry on the plaintiff’s books of the amount so-due, which sum White has not accounted for or paid to the plaintiff, but which the plaintiff has paid to parties entitled thereto.
      Here again the specific items which make up the deficiency are not proven, but it is shown that White kept the sundry ledger account, principally. He must have known the true state of the account, and he made the false entry in the daily statement register, evidently for the purpose of concealing this deficiency and forcing a balance.
      I do not think it incumbent upon the plaintiff to prove the exact, particular-sums of money which constitute the deficiency. It is evident that in most cases this would be impossible; the money may have been taken from the general funds of the bank or from any one fund and the false entry made in any account to conceal a defalcation. (1 Morse Banks & Banking [3d ed.], § 42, and cases cited.)
      It amounts to this: The plaintiff had §361.08 less than it should have had with 'which to pay its sundry depositors. White kept this account, and made a false entry in the books to conceal the deficiency; there is no surplus in any other-account to make it good. The other employees of the plaintiff, except one who is dead, have been examined and the fact of her death and the correctness of the entries made by her have been shown, so far as such correctness could be shown, and I am of the opinion that the man who kept the books and made the false entries is responsible for this as well as for the other items set out in the bill of particulars, and that his sureties are liable therefor.
      It is a, significant. fact that there is no testimony showing that any person except White made a false entry in any book of the plaintiff. There is nothing to cast suspicion on any one else, and it is not too much to say that the man who had the opportunity to take the money, and who in fact made the false entries to conceal some one’s default, is the defaulter.
      The defendants properly contend that they cannot be held for anything not specified in the bill of particulars, nor for anything which occurred prior to the date of their bond; it is unnecessary to cite authorities to sustain these propositions. Both are conceded.
      Nor can they be affected by declarations or admissions made by their principal after the termination of the matter for which they are bound, but I cannot quite agree with the defendants' contention that no entries in plaintiff’s books, except those made by White himself, are pertinent to this inquiry. For instance: When it is shown, as it has been in this case, by the books kept principally by White, but partly by others, and by sufficient, sustaining and competent evidence of the correctness of the sundry ledger account that the bank owed sundry depositors a certain sum of money, and it is further shown that, to conceal a deficiency. White made a false entry in the daily statement register that the bank owed a less sum, I am of the opinion that the sundry ledger account as it stood on the books between January 3, 1893, and August 15, 1895, is admissible and pertinent to the questions at issue, its correctness having been shown.
      As to defendants’ contention that, it has not been shown that White misappropriated the money after January 3, 1893, and that it might have been all taken before that day, I think the presumption is that the money was taken when the false entries were made, and they were made after that day.
      So far as White made false entries of credit to offset or balance his false entries or debits, I do not see how that changes the true state of affairs.
      If the false credit entries had been true and represented actual transactions, the result must and would have been that there would be a surplus in some accounts to balance the deficit in others, but no such result appears; the false credit of $500 to New York account to balance the false debit of $500 to the certificate of deposit account does • not in fact add §500 to' the New York account; it is a mere false entry to make the books balance on their face, and conceal the theft of $500.
      It appears, however, that there was no surplus in any account; that while some of them, including cash and bills rediscounted, were in balance, there was a shortage in every other active account.
      The defendants claimed and gave testimony tending to show that nearly, if not all, the shortage sought to be recovered occurred before their bond was given, viz., January 3, 1893.
      That testimony was substantially this: The daily statement register kept by White states that on December 30, ,1893, the outstanding certificates of deposit amounted to §58,153.73. The next entry in that register is of the date of Janaary 4, 1893, showing outstanding certificates amounting to §61,042.72. Showing, according to the statement made by the witness Stillman, an increase between these dates of $2,890.
      This increase .is shown on the books. There are no journal entries between December 30, 1892, and January 4, 1893, but under date of January 4, 1893, journal B, page 257, certificate account is credited with certificates 1459, §1,500; 1460, §100; 1461, §450; 1462, §500; 1464, §100, amounting in all to §3,150, and on page 256, same date, the account is debited certificates 1402, §85; 1433, §25, and 1455, §150, §260. Increase of outstanding certificates, §2,890.
      Mr. Stillman, an expert witness for defendants, made an examination and list to ascertain and show the amount of certificates actually outstanding on January 3, 1893, and paid by the plaintiff after that date, it being conceded that all such certificates had been paid and taken up.
      He states the result as follows: Certificates dated prior to January 3, 1893, and outstanding on that day and paid thereafter, §61,056.92. Deduct error in footing, §10. Amount as per Stillman’s list, §61,046.92; and defendants claim from this that as the plaintiff’s books show certificates outstanding January 3, 1893, amounting only to $58,152.72, that White was short §2,894.20 before the bond in suit was given, and, therefore, no recovery can be had in this action.
      Mr. Chase, a witness for plaintiff, states that the certificates outstanding bearing date prior to January 3, Í693, amounted to $61,042.72.
      This difference of $4.20 between Stillman and Chase is not material to the present inquiry; the amount shown by each witness is substantially the amount of the book increase of that account between December 30, 1892, and January 4,' ■1893.
      Both Stillman and Chase say that the number of the last certificate issued prior to January 3, 1893, is 1460, and both of them are mistaken.
      No. 1459 is dated December 30, 1892, for......................... $1,500 00
      No. 1460 is dated December 27, 1893, for....................... 100 00
      These two certificates were not entered upon the books until January 4, 1893, and are no part of the §58,152.72 shown by the daily statement to have been Outstanding December 30, 1892; but in his computation and list Mr. Stillman charges them against the $58,152.72 as part of such outstanding certificates; they should be added to the $58,152.52 to show the proper amount, making §59,752.52 of certificates outstanding January 3, 1893, as stated in the books.
      But the bank actually paid, of such certificates, according to- Mr. Stillman’s list, $61,046.92, while its books show outstanding only $59,752.72, making an apparent shortage of §1,294.20 existing in this account prior to the date of the bond.
      
        But it further appears that on August 15, 1895, when White ceased to be cashier, the amount of outstanding certificates was §64,282.09, and that White stated the amount on the daily statement as $61,250.43, showing a shortage at that time of §3,031.66. Deducting the shortage existing January 3, 1893 ($1,294.20), it leaves a further deficiency in this account of $1,737.46, which is more than the plaintiff claims.
      While it is shown that at some time, the exact date is not given, but probably soon after White left, the plaintiff had noticed the discrepancies in the books, it does not appear that it was informed or had notice of shortages or deficiencies until Chase finished his examination of the books.
      I do not think the letter of August 30, 1895, from the bank to Mr. Wood is sufficient to exonerate defendants from liability or estop the plaintiff.
      It is shown that the plaintiff applied White’s stock to the payment of a debt for which it was pledged; it had the right to- do this, and also so to apply any -deposit he had to an amount sufficient to satisfy such debt.
      No evidence has been given as to the other property which defendants allege White had.
      The defendants further allege that said plaintiff, in and by its statement and reports made prior to January 2, 1893, misrepresented its financial condition and thereby induced defendants, who relied upon the truth of such representations and had no knowledge of their falsity, to sign the bond.
      It is not averred or proven that these statements and representations were made to defendants personally. I understand from the testimony that the allegations refer to the reports made by plaintiff to the Banking Department, both before and after January 2, 1893.
      There is nothing to show what these statements were, except that they did not show any shortages on account of defalcation of White, and it does not appear that any of them ever came to the notice of knowledge of the defendants or influenced them in -any manner; therefore, I am of opinion that the defense fails on this point.
      All of these questions were before the Court of Appeals, and were fully and ably argued by the learned counsel for defendants. If that court had been of opinion that they were sufficient it would have probably reversed the judgment for some reason additional to the cause assigned, which was solely that the books were improperly admitted, and the opinion seems to indicate pretty strongly that if the recovery had been confined to the shortage in-the certificate of deposit account the judgment would have been affirmed.
      For these reasons I am constrained to find in favor of'the plaintiff.
     