Boston & Maine Railroad v. Oliver

Bel:l, J.

Upon the facts presented by the disclosure of the bank, the question arises, whether the credit given to Oliver could be cancelled, and the money paid to another person, without the assent of Oliver, so as to discharge the bank; and we think there can be no doubt that the proper course was taken both by the cashier and the directors. The cashier has the general power to correct any erroneous entries made by' him upon the books of the bank ; the effect of any erasures or counter-charges being dependent upon the facts as they may appear . upon the proof. And we take it to be the every day practice of *177 book-keepers, whenever they find an erroneous charge or credit, to correct it by a counter-charge. As the counter-charge in this case might affect the interests of the bank in a case where the cashier had personal interests, it was fit that he should lay the case before the board of directors, and seek their sanction for what he did; and it was proper for them to allow the error to be corrected, when they were satisfied it was such.

The only reasonable conclusion upon the evidence was that to which the directors came, that the money was paid to the cashier personally, and no deposit in the bank was authorized or intended.

If the books had remained without any counter entry, the bank would not be chargeable. The book contains their written admission that they had received this deposit on account of Oliver, and had placed it to his credit. In their disclosure they say the same thing, but they now say, and, notwithstanding these admissions, they have a right to say, We are now satisfied that the whole entry was a mistake ; the money was not in fact paid to the bank, nor deposited to his credit by his direction; and they now declare under oath they owe Oliver nothing. They lay before the court the facts on which they rely to justify this declaration, and we think their conclusion is correct. They are not concluded by the entry on their books, or their admission in the disclosure, to show the facts as they really existed.

Morton, the cashier, cannot be charged. He admits the receipt of six hundred dollars from Oliver. He states his belief, formed after he learned that Oliver had absconded, contrary to his impression when he received the money, that it was placed in his hands for the purpose of indemnifying him and his co-sureties on Oliver’s bond against the liability to which Oliver knew, but Morton did not suspect, they must be subject, as soon as it was known that he was in arrears to his employers, and had absconded. He states the facts upon which he rests his belief, and his conclusions seem to us to be reasonable. If that purpose had been stated, the money would have constituted a pledge, which he would in any event have had a right to apply to the *178 purpose for which he received it. His right so to apply it would not be affected by a trustee process. The money was, however, merely placed in Morton’s hands to be kept till he called for it. It was not in fact pledged for any purpose. This trustee alleges that he is not chargeable for this money, because he was bound to pay and has paid the same amount as a surety for Oliver on his official bond to the plaintiffs. It is contended, however, that as there was, at the time of the commencement of the suit, no subsisting debt due to the trustee, upon which he could then maintain an action, he cannot be allowed a set-off on that account. The cases of Varney v. Brewster, 14 N. H. 49, and Cox v. Cooper, 3 Ala. 256, cited in support of this position, are not cases of foreign attachment, but relate to set-offs in actions at law, which stand on ground materially different from the equitable set-off allowed to trustees. The cases cited for the defendant show that in Massachusetts a trustee cannot be charged for a debt due the principal debtor, where it appears that he has been compelled before the disclosure to pay a greater sum as surety for the principal. In the first of the cases cited the distinction between the case of a set-off at law and in a trustee process is distinctly recognized; though it is said that, by the practice there, the rights of a defendant would be protected at law, by allowing continuances of the action until a set-off could be made of the defendant’s judgment recovered in a cross action. A similar practice exists here, in cases resting upon like reasons. Hutchins v. Riddle, 12 N. H. 464.

The principle of these decisions in Massachusetts has been repeatedly recognized by this court. In White v. Richardson and Trustee, 12 N. H. 93, the principal debtor labored for the trustee, upon an agreement that the latter should retain the proceeds of his labor as an indemnity against a liability of the trustee as bail for the principal. Before the disclosure the trustee was compelled to pay the amount as bail, and it was held that the trustee could not be charged. The claim of the trustee was merely a contingent liability, though there was an express agreement, which does not- exist here, that the *179 fund should be held as an indemnity against it. In Boardman v. Cushing and Trustees, 12 N. H. 105, the same principle was recognized, and it was held that the express pledge made no difference. The trustee has the right of set-off, or to retain for all demands due him from the principal, contracted before the service of the process, and payable at the time of judgment; and it is said that in some cases the court interpose beyond that. In Swamscot Machine Co. v. Partridge and Trustees, 5 Fost. 369, this question again arose, and the rule is laid down thus by the learned judge who delivered the opinion of the court: “ That trustees may retain any sums which they are entitled to receive at the hands of the principal defendant, at the date of the disclosure, upon claims or contracts existing prior to the action, can not admit of doubt.” In fact, a trustee is entitled to retain or to set off, against the debt which he may owe the principal, any demand which he might set off, or of which he might avail him- - self by any of the modes allowed either by the common or statute law, if the action was brought by the defendant himself, or if the proceedings were wholly between the trustee and principal defendant; and the case of Boston Type Co. v. Mortimer is cited as sound law. The principle must, therefore, be regarded as settled here, and the trustees must be discharged.