HOLDEN V. WHITING.
and others v.
(Oircuit Oourt, D. Ma88achu8etf8. February 18, 1887.)
EsTOPPEL-OF BANXBY REcORD OF VOTE-FRAUDULENT ALTERATION-SALE OF MORTGAGE.
The secretarY,and·treasurer of a savings bank fraudulently altered the , record of a vote/of the trustees authorizing him to discharge and release a]] mortgagesbelpnging, to the bank, by interpolating the word" assign, " and then assigned one of the mortgages for full value to A. Held, that the evidence showed that the transaction was a sale, and not a pledge; that the purchase W,$S made on A/s own account, and not on account of a national bank, as and that the purchaser acted in good faith and without notic,e C)f any fra\l.,d; that it was immaterial whether the signature to a certified copy <if thereoord received by the purchaser through the mail (sent. as he supposed, ,by the secretary in fulfillment of his promise to that effect) was a for&,eryj)f tb,e s,eqretl/-U's name or not; and that the purchaser obtained a good tItle by estoppelagainst the bank; following involving sim:ilarfraudu,:lent trans8ctions of the same official. ' ,
, In; Equity. 'BtnJ.t P., Butler ,and Solon Bam.crojt, for complainants. J. G.'.:6bboU; for defebdant.
COLT, J. This is a bill in equity brought by the receivers of the Reading Savings Bank ,against the defendant, to obtain the reconveyance of a number of mortgages claimed to belong to them as receivers of the bank. On March 22, 1879, the bank failed. It was discovered about this time that N. P.Pratt, the secretary and treasurer of the bank, had fraudulently disposed of a large part of the assetB. By a vote of the trustees, passed in 1876, the treasnrer was authorized to discharge and release all mortgages belonging to the bank. This· record was altered by Pratt so as to read" discharge, assign, and release." By means of this fraudulentinterpolation Pratt succeeded in disposing of a large number of The rights of purchasers of these securities have several times been before the courts for adjudication. In Whiting v. Wellington, 10 Fed. Rep. 810,Judge LOWELL held that a purchaser in good faith without notice Qbtainedatitle by estoppel against the savings bank by virtue of the certificate of its recording officer that a certain vote was found. 11pon its record. This :decision was followed in ann. v. Reading Sav. Bank, 137 Mass. 431, and in Holden v. Phelps, 141 Mass. 456,5 N. E.Rep. 815. The defendant.derived title to the notes and mortgages in controversy through John F. Kimball, president of the Appleton National Bank, and those for whom Kimball acted, and it is admitted that if Kimball, andJbose for whom he acted, had no title, the defense fails. The positio;u is taken by the plaintiffs that Kimball had notice that ;these securities "ere taken contrary to law, and that he is guilty of frarid. Assnming;that notice and fraud on the part of Kimball are charged in the bill" which the defendant denies, I can find no sufficient proof to sustain these allegations·. It is in evidence thatiduring the years 187·8 v.29F.no.17-56
and 1879, owing to a feeling of insecurity on the part of depositors towards savings banks, it was' customary for the banks to raise money by assignment of their securities or otherwise to meet demands. It is shown that Kimball purchased mortgages from other savings banks in Massachusetts. The fact, therefore, that the Reading Savings Bank wanted to dispose of some securities to raise money was not exceptional in it;s character. There was nothing in it, unusual, or calculateli t6 excitesnrprise or to put a person upon his guard. Nor, upon the evidence, was there anything unusual, or calculated to arouse the suspicion ora person of Kimball's banking experience, in permitting the treasurer of a savings ,bank to assign securities. A strong fact going to ,prove ,Kimhall'sgoQd faith is that he paidfull face value,including interest, for these mortgages. There is no evidence to show.·that Kimball had any ,suchrelll.tions with SidneyP. Pratt, the son of the treasurer, and engaged him in defrauding the bank, as go to prove any lmowledge on his part of anything irregular. I have carefully examined the transactions with which the son was conne.cted, and which it is claimed are calculated to throw suspicion, at least, upon Kimball, and, in my opinion, the facts do not warrant any 'such infllrence. I have no reason to doubt Kimball's statement that he never saw Sidney P. Pratt but dnce to recognize him, and never had any conversation with him. The plaintiffs' charge of naud or notice is not sustained by proof. . , Another ground relied upon in this ease is that the certificate received by Kimball was not a copy of the record of the bank with its fraudulent interpolation,b'ut was a forgery of sU'ch record. The 'copy received by Kimball has the word "assign" placed before" diScharge," while the fraudulent record places it after. The copy Kimball produces is the same as the copy found in .Thompson's diary, (see Holden v. Phelps, 141 Mass. E. Rep. 815,) which was made by Thompson at least several months' before' tlie first .purchase by Kimball..., It also' appears that· the bo<ily of Kimball's copy is probably not in the handwriting of N.P. Pratt, but of his son, Sidney. As to the signature of thiscertifi.. cate, another 80n of Pratt testifies' that he does not think his father wrote it; and Solon Bancroft, one of the receivers of ther hank!, testines that he is flimiIiarwith Pratt's writing, and that he is'quite conndelit it was not . \ written by him. ,By this means the plaintiffs undertake to establish that Kimball's certificate was, not sent to hini br N; p;. Pratt, the treasurer and' secretary, but that it came from Thompson, and was a forgery. Kimball swears that ,he asked Prattif he had authority to assign mortgages; that he smd he had, and would furnish a copy of the voiet'and that, imme,diiately after, he sent him the certificate, which he produces, by mail'. This evidence stands uncontradicted. I think the defendant has fairly .miLdeotlt that the certificate, which is, in substance, a copy of the record .althe bank,'was received by Kimball from N. P. Pratt, secretary and treasurer, in the course bf negotiating the sale ofthefirst mortgages purchased, and it follows that,whether forged or net, it binds the bank as against an innocent party acting in good faith and without notice.