
    The First National Bank of Sing Sing, Appellant, v. The Sing Sing Gas Manufacturing Company and Others, Respondents.
    Second Department,
    June 7, 1907.
    Principal and agent — powers of bank cashier — bills and notes — evidence of agency—conversion by cashier. '
    The cashier of a bank. has general authority to receive additional security for notes held by it, especially where he is intrusted with the entire management of its affairs. -He is not disqualified from receiving collateral to secure notes held because, he.is an indorser, on the notes. Hence, in an action to recover on said notes evidence that the cashier did not deny a statement-tliathe received security as a- representative of the bank .is admissible. -
    The rule that the authority of an agent cannot he proven by his declarations does not apply when his authority is undisputed.' ' 1
    When a cashier of a bank who has received iri its behalf security for notes held by it on which he is an. indorser, afterwards steals the .security from- the bank, the theft is a theft from the hank and not from his fellow-indorsers, and the hanjr is responsible for the'conversión. .
    Appeal by the plaintiff, The. First National Bank of Sing Sing, from a judgment of the Supreme Court in favor of the defendants, entered in-the office of the clerk of the county of Westchester on the 5th day of March, 1904, upon the report of a.referee dismissing the complaint upon the merits.
    
      'Charles F. Brown (Smith Bent and. Samuel Watson with him on the brief], for the appellant.
    
      George H. Fletcher, John Larkin and Henry A. Prince, for the respondents.
   Miller, J.:

This action is on a promissory note made by the defendant, the Sing Sing Gras Manufacturing Company,, and indorsed by the defends ants Hoxon, Maurice, the defendant Larkin’s intestate, the testator of the defendants Young, and one Allen. Said Hoxon was the plaintiff’s cashier and the treasurer of the maker of said note. The maker of -the note executed and delivered to said indorsers a mortgage to secure them for their indorsement' of said note and one other also discounted by the plaintiff., Subsequently said indorsers, the principal stockholders of said gas company, made an agreement with one Kimber to sell and transfer to him ninety per cent of tile stock of said company. Said indorsers agreed to pay the floating indebtedness of said company, consisting of said two notes, and to cancel and satisfy said mortgage on' receiving $10,000 of the bonds of said ■ company. When the parties met to execute said agreement the bonds were delivered to said Hox-on, who. deposited 'them among his private papers at the plaintiff’s banking house. Subsequently he sold substantially all of the bonds and used the proóeeds to reduce his indebtedness to the plaintiff for moneys unlawfully appropriated by hi'tn. The defendants set up a counterclaim for the conversion of said bonds and upon that succeeded on the trial before the referee.

The sole point presented by the appellant is that the finding that the plaintiff received said bonds as .collateral security for said notes is based wholly on illegal evidence received over objection and exception. We may first examine this point, for, if it is untenable, it will not be necessary to consider, the other defenses urged by the respondents. The alleged illegal evidence consisted of testimony to the effect that at the time of the execution of the agreement for the delivery of said bonds, the defendant Larkin’s intestate stated to said Kimber that said Hoxon was present as the representative of the bank for the purpose of receiving said bonds, and that said Hoxon did not demur to said statement, but took the bonds. The contention is made that the authority of an agent cannot be proven by his own declarations, and that said Noxon was disqualified from acting a$ the agent of the bank-in a matter in which he was personally interested., i ' . i

It is not pretended that the cashier of a bank has -not general authority to receive additional security for notes held by it, and in this case there is. abundant evidence that the plaintiff’s directors intrusted the entire management of its affairs to said NcSxoti. The mere fact that he-was an indorser on, the notes did not disqualify him from receiving-collateral1 in behalf of the bank, because his interest in that transaction was in no sense adverse to the. bank. It is'unnecessary.to refer in detail to the. many authorities • cited by ■the appellant on .this question, for they áre all based upon a principle which has no. application to the situation disclosed in this case. The fact that said- N-óxon was an indorser would tend -to increase rather than diminish his vigilance for his principal, and it is difficult .to see how the latter could be injured by receiving collateral without releasing the indorsers. • '

The well-settled principle relied upon by the appellant, that the authority of the agent cannot be' proven by- his declarations, has no - application to a case where his authority is undisputed. The- question involved here- relates, not to his authority, but to the capacity ' in which he acted, and--1 know of no better way of' solving that - question than by ascertaining just what occurred when dhe bohds were delivered. He had authority to receive them in behalf of the.' bank; he assn nied to exercise that authority, and'when heafter- ■ wards stole thetn he stole frorh the bank and -not from his' felloiv-indorsers. -

I advise that the judgment be affirmed.

Hirsohbebg, P. J-., Jenks and Ga-ynob, JJ., concurred. '

Judgment affirmed, with costs.-  