
    SHEPHERD F. KNAPP, Receiver, &c., of the Bowling Green Savings Bank, Plaintiff and Respondent, v. WALTER ROCHE, Defendant and Appellant.
    I. Corporation, savings tank.
    
    1. Prohibition in charter against investing money deposited, except upon certain specified securities, and against the president, vice-president, any trustees, officers or servants directly or indirectly borrowing the funds of the corporation, its deposits, or in any manner using the same or any part thereof, except to pay necessary current expenses under the direction of board of trustees.
    (a) ACTIONS BASED ON THE STATUTE FOR THE RECOVERY OF MONEY INVESTED OR USED IN VIOLATION OF THE PROHIBITION.
    1. Constitutive pacts op.
    
      (a) What are: that there was a violation; that defendant is one of the parties falling within the purview of the prohibition; and that he authorized, or”was a party to, the violation.
    (6) What are not: that the money invested or used has not been repaid; that a demand has been made on the borrower; that the money has been lost, either through the inadequacy of the security or the insolvency of the borrower or otherwise.
    (5) VIOLATION OP PROHIBITION, WHAT CONSTITUTES.
    1. Loaning money on promissory notes, cashing checks, or permitting a depositor to overdraw his account.
    (c) RATIFICATION OF.
    1. What not sufficient to raise a liability as to one not originally a party to the violation.
    
    
      (a) In reply to a statement made by the bookkeeper to defendant 11 that the bank had to make up its bank account and those checks ” (referring to checks given for an unauthorized loan to C.), “must be got out of the way,” “ and he would make it a call loan to the defendant (the vice-president and a trustee), the defendant said “Do whatever you please. Charge it to C.”
    HELD,
    not a ratification whereby the defendant could be made liable on account of the loan.
    Before Speir, Sanford and Freedman, JJ.
    
      Decided November 4, 1878.
    This is an appeal from a judgment against the defendant entered upon the verdict of a jury, and from an order denying a motion for a .new trial made upon the judge’s minutes.
    The action was brought to. recover the amount of certain moneys of the insolvent Bowling Green Savings Bank, which the defendant, acting as one of its officers and trustees, had invested, loaned and used in violation of the express provisions of its act of incorporation, and which had never been repaid or collected.
    There was no allegation in the complaint, and no proof on the trial, that any demand was ever made either upon the railroad company or Colburn (in the opinion referred to), or that they refused or were unable to pay, or that the alleged loans or overdrafts had not been repaid and were uncollected.
    The facts pertaining to the questions discussed sufficiently appear in the opinion.
    
      John T. McGowan, attorney, and of counsel for appellant, among other things urged:
    I. While there can be no doubt that an action may be sustained against an officer of a bank for making loans of its funds in a manner not authorized by law, yet such an action can be maintained only by strict proof that the corporate funds or property have been lost and wasted, and the corporation has suffered actual loss. Though the prohibition in the act of incorporation may be held to confer a remedy by action in favor of the party injured, yet it is no greater in extent than that which would exist in the absence of the prohibitory clause (Potter on Stat. 160 ; Almy v. Harris, 5 Johns. 175). At common law, no action would be maintainable in the absence of proof of loss arising from the wrongful act (Angell & Ames on Corp. §§ 312, 314).
    II. In the present case, there was no evidence whatever of the taking or loaning of any money, or indeed of any tangible thing, and therefore no support for any part of the plaintiff’s claim. 1. There was no evidence whatever that the defendant ever had in his possession, actual or constructive, any money belonging to the Bowling Green Savings Bank. 2. The evidence proved, and only proved, that the secretary of the bank, who had supervision of the business of the bank, and charge and control of the receiving and paying teller thereof, had permitted the Avenue 0 Railroad Company and Daniel K. Colburn, two of its depositors and dealers, to overdraw their accounts with the bank, and thereafter, at various times, credits were given to both on the books of the bank against which they drew their checks, respectively. ' The transaction consisted in the making of entries in the books of the bank giving a credit to each of the dealers above named, and they were thereby authorized to draw against the amounts to their credit respectively in the bank. 3. True, the effect of these transactions was to cause the Bowling Green Savings Bank to pay the checks of the railroad company and Colburn, drawn against their respective accounts in said bank, but the testimony nowhere shows that the overdrafts, if any, were not paid to the bank before the appointment of the plaintiff as receiver, or to the plaintiff subsequent to his appointment. 4. There is no allegation or proof that any demand was ever made either upon the railroad company or Colburn ; that they refused or were unable to pay, or that the alleged loans or overdrafts have not been repaid, and were uncollected. 5. Conceding that the alleged loans or overdrafts were made in violation of the restrictive clause in section 4 of the act, in neither that nor section 6 is any pecuniary liability imposed on the offending trustee or trustees.
    
      Devlin, Miller & Trull, attorneys, and John E. Devlin, of counsel, for respondent.
   By the Coubt.—Speib, J.

Section 6 of the act specifically defines the business and object of this savings bank, which are to receive deposits of moneys, and to invest them or loan the same on certain specified State, United States, city or county securities of this State, or in such other manner as is authorized by the act of incorporation, for the use, interest and advantage of the depositors. It also provides that no president, vice-president, trustee, officer or servant of the corporation, shall directly or indirectly borrow its funds or its deposits, or in any manner use the same, “ except to pay necessary expenses.” It further provides ‘ ‘ that no money deposited in the said savings institution shall be invested except in the securities and stocks mentioned in the section, or on bonds and mortgages of unincumbered real estate, worth at least double the amount of the loans to be secured thereby.”

It clearly appears that the defendant loaned, by way of temporary investments, the funds of the bank to the Avenue C Railroad Company, and to one Col-burn, partly upon promissory notes, and partly without any evidence of debt whatever, but in no instance upon any of the securities, stocks, bonds or mortgages permitted by the act of incorporation. The testimony is uncontradicted that Smith, the president, the defendant, the vice-president, and the bookkeeper, Selmes, had a full and clear understanding during the whole time that these overdrafts and loans to the Avenue C Railroad Company were to be protected and taken care of at all events. I am unable to see that, so far as the verdict includes the balance of these overdrafts and loans to this railroad company, that any exception can be taken to it. The evidence in the case fully sustains the findings of the jury in this particular.

The case discloses that there was an account kept by Mr. Selmes, the bookkeeper, of the loans made to Colburn, and that the whole sum amounted to $99,860.74, and that there was paid on account thereof, which had been credited to Colburn, an amount leaving a balance, as due from him, the sum of $15,570.28. I am of opinion that the whole of this sum cannot be charged to the defendant. In other words, the sum of $5,500, included in this balance, was borrowed by Col-burn from Selmes, the bookkeeper, on three several distinct checks drawn by friends of Colburn, payable to his order, and indorsed by him about June 21, 1870, without the knowledge of the defendant, and when he was on his way to Europe. The checks were cashed by Selmes, after advising with Smith, the president, with the money of the savings bank, and were put into the drawer and counted as cash. These checks remained in the drawer for about six months, continued to be counted as cash, and when it became necessary for an account to be made up at the end of the year to show to the superintendent, it was deemed important to get these checks out of the way, as it would not answer to call them money, especially as the president and the bookkeeper had tried their best to collect them from Colburn and had failed; It was then determined to make this a call loan, and put it into defendant’s account, which was done on December 31, 1870. The only proof that the defendant had anything to do with the loan to Colburn relied upon by the plaintiff’s counsel, and which is all that appears in the case, relates to a conversation between Selmes and defendant, as testified to by the former. He says he told defendant—as I understand his testimony—that the bank had to make up its bank account, and those checks must be got out of the way, and he had, or would make it a call loan by defendant. The reply was, “Do whatever you please. Charge it to Col-burn.” This was not a ratification of the original loan, which was made by the witness Selmes, and for which the defendant could be made liable. Selmes does not appear to have had any authority from Boche to loan the money and count the security which he took as cash in his money drawer. Batification is the subsequent adoption of certain acts, which is equivalent to a prior authority. The witness Selmes had been before particularly examined by plaintiff’s counsel as to what he knew about' the loans to Colburn, and his answer was, “He, defendant, spoke to me about all these, except this $5,500. That has to be explained, you know.” It is also to be remembered that this witness stated “that, after the overdrafts had been accumulating, Mr. Smith, Mr. Roche and myself, had a perfect understanding all the time as to these overdrafts and loans to the Avenue C Railroad Company, that they were to be taken care of and protected—that was the first thing to be done, and we were to make the explanations afterwards.” This arrangement was not extended to the Colburn loans.

The judgment and order must be reversed and a new trial had, with costs to appellant to abide the event, unless the plaintiff deduct from the verdict the sum of §5,500, with interest from December 31, 1870, in which case the judgment and order must be affirmed without costs on this appeal.

Freedman, J., concurred,  