Gottberg v. United States National Bank

We agree with the learned judge by whom this cause was decided at the special term that the defendant bank acquired a good title as pledgee of the six bonds from Louth, and that the testimony was insufficient to prove notice to the bank that Louth was disposing of the assets of the estate of his testator for his own benefit, or that it was put upon inquiry before it made the loan. The collection and criticism of the teases contained in the opinion of the court below covers the whole field of argument, and it is unnecessary to repeat what is there said; but we think that too close a deduction has been made from them. We do not concur in the exact statement of the rule as laid down by the learned judge, viz., that, to charge a purchaser or pledgee in every case, he must have had direct evidence that the money was not paid or advanced to the executor for a purpose connected with the administration of the assets, but for a different purpose, and that the executor was going to misapply the funds. Undoubtedly, under the cases referred to and commented upon in the opinion, the purchaser or pledgee may, up to a certain point, rely on the general presumption that an executor is acting for the estate, and is not committing a devastavit; but if such facts are disclosed as would put the party, he being a person of ordinary prudence, on inquiry, he cannot supinely rest on the presumption, when inquiry would lead him to detect the wrongful purpose of the executor, and result in knowledge. Lowry v. Bank, Taney, 310. We assume that by the words “direct evidence” the learned judge meant evidence which of itself, and by necessary conclusion, establishes the guilty or fraudulent purpose; and it is in that view we cannot assent to the precise formulation of the rule, otherwise properly applied. But with the explanation mentioned the conclusions of the court below were entirely correct. Kothing occurred in the transaction, from first to last, to put the bank upon notice or inquiry of a title that could not be transferred, or of any intent on the part of Louth to despoil the estate of which he was executor. When application was first made to Mr. Murray, the president of the bank, it was stated merely that Louth wanted to borrow on certain registered bonds, and he was told the registration must be transferred to the name of the bank. That was done, and nothing then appeared on the production of the bonds, except that title had been made by a transfer from executors. The bank was not required to institute or prosecute inquiries, nor to ask questions on that simple circumstance. The judgment was right, and must be affirmed, with costs.