
    [No. 18173.
    Department Two.
    December 21, 1923.]
    J. P. Duke, as Supervisor of Banking etc., Appellant, v. Dean Johnson, Respondent.
      
    
    Principal and Agent (43) — Atjthobity of Agent — Evidence— Sufficiency. Tbe authority of the president of a hank to direct the amount of a cashier’s check to be charged to the account of a depositor, from whom he had a general power of attorney, is sustained where it appears that he had freely exercised the right, without question, to draw checks upon and direct charges against the account, and the only denial is the ex parte statement of the depositor, .who refused to submit to cross-examination.
    Same (42). In such a case, it is immaterial that the bank held the obligation of the depositor in excess of the account, where the right of set-off was not exercised and the bank was solvent and recognized the account as a checking account.
    Banks and Banking (20, 23) — Deposits—Payment of Checks— Fraud — Evidence. A cashier’s check, charged by the president of the bank to the account of a depositor, under a general authority to make such charge, is not void, in the hands of the purchaser of the check, because it was the payment of the private debt of the president from the funds of the bank, nor is it material that it was not immediately charged to the account, in the absence of any evidence of fraud.
    Appeal from a judgment of the superior court for Pierce county, Clifford, J., entered November 24, 1922, upon findings in favor of the defendant, in an action to recover money as the assets of an insolvent hank, tried to the court.
    Affirmed.
    
      Guy E. Kelly, Thomas MacMahon, F. D. Oakley, and Robt. B. Abel, for appellant.
    
      Bronson, Robinson & Jones, for respondent.
    
      
      Reported in 221 Pac. 321.
    
   Fullerton, J.

This is an action by the state supervisor of banking, as the officer .in.charge of the liquidation of the Scandinavian American Bank of Tacoma, to recover from the respondent, Dean Johnson, the sum of $31,250. As grounds for recovery, it is alleged in the complaint that Johnson, while vice-president and trustee of the hank named, fraudulently and in collusion with the president of the hank, and without consideration, took from the vaults of the hank the sum sought to be recovered. Issue was taken on the allegations of the complaint and a trial was had, which resulted in a judgment in favor of the respondent. The supervisor of banking appeals.

The facts, concerning which there is little or no dispute, are, in substance, these: In the early part of the year 1919, the respondent, Johnson, was a resident of the State of New York. He was then some twenty-five years of age and had just been discharged from army service. He did not have sufficient funds to establish a bank on his own account, but was desirous of investing such money as he did have in a banking business at some place on the Pacific coast, either by joining with others in the establishment of a new bank or by becoming connected with an established bank. He had heard of a Mr. Jafet Lindeberg, who was reputed to him to be wealthy, and also reputed to be connected with a number of banks severally located at places in the different coast states. He wrote to Mr. Lindeberg, at his address in San Francisco, stated to him his circumstances and his desires, and inquired as to the possibility of acquiring a connection with some one of the banks in which Mr. Lindeberg was interested. The Scandinavian American Bank of Tacoma had shortly theretofore increased its capital stock from four hundred thousand dollars to one million dollars, and some part of this stock was offered for sale to the general public at a premium of twenty-five dollars per share. Mr. Lindeberg answered the letter, informing the respondent of this fact, and telling him that the president of the hank, Mr. O. L. Larson, would he in New York at a certain time named and would personally consult with him concerning the matter. After-wards Mr. Larson met the appellant in New York City, at which meeting an agreement was entered into whereby the respondent agreed to purchase two hundred and fifty shares of the newly issued capital stock of the Tacoma hank at a price of $31,250, and Mr. Larson agreed that, in consideration of the purchase, he would repurchase from the respondent the shares mentioned, at the price the respondent paid for the same, should the respondent thereafter become dissatisfied with his purchase; the agreement to repurchase being made to avoid the necessity of a personal investigation of the situation on the part of the respondent. Thereafter the respondent purchased the shares of stock, paying for them in full in cash, and thereupon Mr. Larson put in writing his agreement to repurchase the stock.

It seems to have been the mutual understanding between the respondent and Mr. Larson that the respondent should have a part in the conduct of the hank, and he appeared at the hank to take up his duties in January, 1920. Hé was then elected a vice-president and a trustee of the hank. He was first assigned to the duty of meeting the new customers of the hank, but owing to the somewhat inadequate quarters in which the business of the hank was conducted, his office assignments were unsuitable for this purpose, and he thereupon sought from Mr. Larson other employment and was put upon outside work. He soon became dissatisfied with this work, as he felt that it did not bring him in contact with that part of the hank’s business in which he desired to become efficient. He then announced to Mr. Larson that he was dissatisfied with his purchase, and asked that Mr. Larson make good his promise to take the bank stock off his bands. This Mr. Larson did, giving bim a cashier’s check on the bank for the amount the respondent bad paid therefor, and taking an assignment of the stock to himself. This transaction took place on November 13, 1920. The respondent placed the check for collection with a bank in San Francisco, California, and it was forwarded to the payor bank, and paid by it on November 18, 1920. Shortly thereafter the respondent severed his connection with the bank. For some few days following the delivery of the check, perhaps until the check was actually cashed, the bank’s books were balanced by some form of counter-charge, not made very clear by the record. After the payment by the bank, the amount thereof was charged, at the direction of Mr. Larson, to the account of Jafet Lindeberg, who then had on deposit with the bank, according to the. books of the bank, a checking account of upwards of $150,000. The bank was found to be insolvent in February, 1921, and was then taken in charge by the state supervisor of banking for liquidation.

Among the disputed questions of fact, is the right of Larson to direct the amount of the cashier’s check to be charged to the account of Lindeberg. The negative of this proposition rests wholly on the testimony of Lindeberg. Bis testimony appears in the record by deposition taken at San Francisco, California. At the taking of the deposition, Lindeberg appeared with personal counsel. In answers to questions put to him by counsel for the supervisor of banking, he stated that Larson had no authority to make the charge and that he had not subsequently ratified it. On cross-examination, however, he refused, on the advice of his personal counsel, to answer pertinent questions concerning his personal business relations with Larson, and pertinent questions concerning the right of Larson to check against Ms account, basing Ms refusal on the ground that Ms answers migM tend to incriminate him. On the other side, it was shown that Larson had, over a long period of time, freely exercised the right to draw checks upon and direct charges to be made against the account. These in their total amounted to a large sum, and several of the individual items were in considerable amounts. There was also exhibited a power of attorney executed by Lindeberg and his wife to Larson and two others authorizing them jointly to transact the general business of the makers of the power of attorney in the state of Washington. It was shown also that Larson individually, usually, if not umformly, exercised the power conferred, and there is no showing that Lindeberg ever questioned his authority so to do.

On the evidence as a whole, the trial court determined the fact against the contention of the supervisor, and we are not inclined to disagree with its conclusion. The deposition of Lindeberg was notMng more in effect than an ex parte statement, and is not worthy of the credence usually imparted to such statements. His refusal to answer carries with it the inference that his business relations with Larson and the bank were not only dishonest but criminal, and the inference that, if the facts were told, Ms personal liberty would be endangered. Assuredly, under circumstances such as these, a court of justice may be permitted to doubt the truthfulness of any of his state-, ments.

The appellant further contends that the credit to Lindeberg’s account as shown on the books of the bank was fictitious rather than real. This claim is founded on the fact that the bank then held Lindeberg’s obligations for an amount possibly in excess of his checMng account. But the bank had not then attempted to exercise a right of set-off, even conceding it had such light. It then recognized the account as a checking-account, and as long as it did so, Lindeberg or his authorized agent were privileged to draw checks thereon. What might have been the resulting conditions were the bank then insolvent or in imminent danger of insolvency, need not he discussed. There is no contention or evidence that it was so, nor is there any claim that the payment worked an unlawful preference under the bankruptcy act.

The appellant further argues that the transaction was void because it was a payment of the private debt of Larson from the funds of the bank. But this, can be the effect of the payment only in case Larson was without authority to pay it out of the funds of Linde-berg on deposit with the bank. If he had such authority, the transaction does not differ from the ordinary transaction where a depositor with a bank draws a check upon his deposit account. It is true a cashier’s check was issued to the respondent, but this is not such an unusual circumstance as to even excite suspicion, much less a circumstance which will avoid the transaction. It is but a form of check by which the bank lends its credit to the purchaser of the check, the purpose being to make it available for immediate use in banking circles. Nor is it a circumstance sufficient to avoid the check that the amount thereof was not immediately charged to Lindeberg’s account. Wffiat may have been the reason for the delay is not shown, but clearly it is not a circumstance from which fraud sufficient to avoid the entire transaction can be presumed. There was no attempt to prove by direct evidence the charges of fraud contained in the complaint. Nothing but the naked facts and their attending circumstances were shown, and these, we conclude, do not warrant disturbing the judgment of the trial court.

The judgment is affirmed.

MaiN, C. J., Bridges, and Mitchell, JJ., concur.  