
    The Farmers and Mechanics’ Bank of Kent County v. The Butchers and Drovers' Bank.
    The teller of a hank, having general authority to certify checks, under instructions not to certify without funds, colluded with a party, and certified his checks for $5,000 without funds. These were deposited with the plaintiffs in payment of a subscription to stock.
    
      Held, that the plaintiffs were bond fide holders for value, and as such entitled to recover.
    
      Held, also, that the delay of a year in presenting the check for payment did not . defeat their right to recover; the delay was not laches.
    
    The bank became the primary debtor, and was bound to hold the amount to meet the payment of the checks when presented.
    (Before Campbell, BoswortR and Hoffman, J.J.)
    January 11th, 1855.
    The case came up on an appeal from a judgment entered the 11th of November, 1854, upon a verdict, after a motion for a new trial was denied at Special Term. The verdict was for the amount of five certified checks on the bank of the defendants, and amounting with interest to $6,522.66.
    
      A. Schell, for defendants, appellants.
    
      H. A. Oram, for plaintiffs.
    The facts and the questions of law arising thereon sufficiently appear in the opinion of the court
   By the Court.

Hoffman, J.

The questions in the case arise upon the following facts:

T. A. C. Green, a dealer and depositor with the defendants, entered into a fraudulent arrangement with Ralph Peck, the teller of the defendants, by which the checks in question drawn upon the bank, were certified to be good. Green wanted to employ them abroad to aid in his purchase or speculations in stock, or in establishing a bank. The teller had a general authority to certify cheeks, qualified with the direction not to certify them without funds, and to enter them in what was termed a certification book. The teller violated his duty and instructions in these particulars. "We consider the plaintiffs as standing in the character of bonâ fide holders of the checks, without notice of the fraud. The plaintiffs passed the amount to Green’s credit as payment for his instalments upon the stock subscribed for; and such stock has been issued and is held by other parties. White v. The Springfield Bank, (3 Sand. S. C. Rep. 222,) is sufficient to justify the-conclusion that the plaintiffs are bond fide holders for value.

Apart from the circumstances of the fraudulent act of the teller in conjunction with Green, the question of authority to give the certificate appears to be settled in this court, by the case of Willett v. The President of the Phœnix Bank, (2 Duer, 121.) The evidence of an actual authority here is as strong as the admission on the pleadings there. There was in that case also fraud or laches on the part of the teller, as noticed in the opinion, by permitting the drawer of the check to withdraw the funds appropriated to the payment; but that was held not to be enough to excuse the bank.

The case as to the fraud is one of the abuse of an admitted delegated power on the part of an agent, and it is supposed to be now established law that in such a case, the principal is responsible to innocent parties.

The remaining point is, whether the plaintiffs’ rights were affected by the delay in presenting the check for payment for about a year.

Checks certified in this manner by bankers in England are used and deposited as bills of the bank.

They are in effect accepted bills, of exchange payable on demand at any time after such acceptance.

In the matter of E. Bruce, (2 Story’s Rep. p. 502,) Robson v. Bennett, (2 Taunton, 388.)

As between the holder and the bank, this acceptance renders the latter the primary debtor, and the cases relating to the duty of demand of payment within a reasonable time, become inapplicable. Those cases govern the relation between the holder and the drawer. (Little v. The Phœnix Bank, 2 Hill, 426.)

In the case of Willett v. The Phœnix Bank before cited, this court held, that such a certificate upon a check, was an unconditional engagement to hold a sufficient amount of the funds of the drawer to meet the check, and that delay on the part of the holder in demanding payment could not impair his right. It was not imputable as laches.

The charge and ruling of the Judge at the trial was consistent with these views of the law, and we see no reason to disturb the verdict or judgment.

Judgment affirmed, with costs.  